Correlation Between Dream Office and National Bank

Can any of the company-specific risk be diversified away by investing in both Dream Office and National Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dream Office and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dream Office Real and National Bank of, you can compare the effects of market volatilities on Dream Office and National Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dream Office with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Office and National Bank.

Diversification Opportunities for Dream Office and National Bank

-0.91

Correlation Coefficient

Dream Office  National Bank

Pay attention - limited upside

The 3 months correlation between Dream and National is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dream Office Real and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Dream Office is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dream Office Real are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Dream Office i.e., Dream Office and National Bank go up and down completely randomly.

Pair Corralation between Dream Office and National Bank

Assuming the 90 days trading horizon Dream Office Real is expected to under-perform the National Bank. In addition to that, Dream Office is 1.52 times more volatile than National Bank of. It trades about -0.18 of its total potential returns per unit of risk. National Bank of is currently generating about 0.26 per unit of volatility. If you would invest  2,392  in National Bank of on September 25, 2024 and sell it today you would earn a total of  118.00  from holding National Bank of or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dream Office Real  vs.  National Bank of

Dream Office Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Office Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

National Bank

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, National Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dream Office and National Bank

The main advantage of trading using opposite Dream Office and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Office position performs unexpectedly, National Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in National Bank will offset losses from the drop in National Bank's long position.

The idea behind Dream Office Real and National Bank of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.