Correlation Between National Bank and Profile Systems

Can any of the company-specific risk be diversified away by investing in both National Bank and Profile Systems 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 Profile Systems 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 Profile Systems Software, you can compare the effects of market volatilities on National Bank and Profile Systems 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 Profile Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Profile Systems.

Diversification Opportunities for National Bank and Profile Systems

0.04

Correlation Coefficient

National Bank  Profile Systems

Significant diversification

The 3 months correlation between National and Profile is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Profile Systems Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profile Systems Software 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 Profile Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profile Systems Software has no effect on the direction of National Bank i.e., National Bank and Profile Systems go up and down completely randomly.

Pair Corralation between National Bank and Profile Systems

Assuming the 90 days trading horizon National Bank of is expected to under-perform the Profile Systems. In addition to that, National Bank is 1.28 times more volatile than Profile Systems Software. It trades about -0.05 of its total potential returns per unit of risk. Profile Systems Software is currently generating about 0.0 per unit of volatility. If you would invest  526.00  in Profile Systems Software on September 5, 2024 and sell it today you would lose (4.00) from holding Profile Systems Software or give up 0.76% of portfolio value over 90 days.

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

National Bank of  vs.  Profile Systems Software

National Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, National Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Profile Systems Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profile Systems Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Profile Systems is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Bank and Profile Systems

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

The idea behind National Bank of and Profile Systems Software 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.