Correlation Between National Bank and General Commercial

Can any of the company-specific risk be diversified away by investing in both National Bank and General Commercial 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 National Bank and General Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Bank of and General Commercial Industrial, you can compare the effects of market volatilities on National Bank and General Commercial 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 National Bank with a short position of General Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and General Commercial.

Diversification Opportunities for National Bank and General Commercial

0.52

Correlation Coefficient

National Bank  General Commercial

Very weak diversification

The 3 months correlation between National and General is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and General Commercial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Commercial and National Bank 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 National Bank of are associated (or correlated) with General Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Commercial has no effect on the direction of National Bank i.e., National Bank and General Commercial go up and down completely randomly.

Pair Corralation between National Bank and General Commercial

Assuming the 90 days trading horizon National Bank of is expected to generate 0.95 times more return on investment than General Commercial. However, National Bank of is 1.05 times less risky than General Commercial. It trades about 0.06 of its potential returns per unit of risk. General Commercial Industrial is currently generating about 0.02 per unit of risk. If you would invest  738.00  in National Bank of on September 15, 2024 and sell it today you would earn a total of  47.00  from holding National Bank of or generate 6.37% return on investment over 90 days.

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

National Bank of  vs.  General Commercial Industrial

National Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, National Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

General Commercial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in General Commercial Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, General Commercial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Bank and General Commercial

The main advantage of trading using opposite National Bank and General Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, General Commercial 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 General Commercial will offset losses from the drop in General Commercial's long position.

The idea behind National Bank of and General Commercial Industrial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.