Correlation Between National Bank and NGEx Minerals
Can any of the company-specific risk be diversified away by investing in both National Bank and NGEx Minerals 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 NGEx Minerals 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 NGEx Minerals, you can compare the effects of market volatilities on National Bank and NGEx Minerals 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 NGEx Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and NGEx Minerals.
Diversification Opportunities for National Bank and NGEx Minerals
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and NGEx is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals 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 NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of National Bank i.e., National Bank and NGEx Minerals go up and down completely randomly.
Pair Corralation between National Bank and NGEx Minerals
Assuming the 90 days trading horizon National Bank is expected to generate 4.26 times less return on investment than NGEx Minerals. But when comparing it to its historical volatility, National Bank of is 4.42 times less risky than NGEx Minerals. It trades about 0.2 of its potential returns per unit of risk. NGEx Minerals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 985.00 in NGEx Minerals on September 5, 2024 and sell it today you would earn a total of 282.00 from holding NGEx Minerals or generate 28.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
National Bank of vs. NGEx Minerals
Performance |
Timeline |
National Bank |
NGEx Minerals |
National Bank and NGEx Minerals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Bank and NGEx Minerals
The main advantage of trading using opposite National Bank and NGEx Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, NGEx Minerals 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 NGEx Minerals will offset losses from the drop in NGEx Minerals' long position.National Bank vs. Apple Inc CDR | National Bank vs. Microsoft Corp CDR | National Bank vs. Amazon CDR | National Bank vs. Alphabet Inc CDR |
NGEx Minerals vs. Income Financial Trust | NGEx Minerals vs. National Bank of | NGEx Minerals vs. Verizon Communications CDR | NGEx Minerals vs. Queens Road Capital |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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