Correlation Between National Bank and Nexoptic Technology

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

Diversification Opportunities for National Bank and Nexoptic Technology

0.73

Correlation Coefficient

National Bank  Nexoptic Technology

Poor diversification

The 3 months correlation between National and Nexoptic is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Nexoptic Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexoptic Technology Corp 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 Nexoptic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexoptic Technology Corp has no effect on the direction of National Bank i.e., National Bank and Nexoptic Technology go up and down completely randomly.

Pair Corralation between National Bank and Nexoptic Technology

Assuming the 90 days horizon National Bank of is expected to generate 0.1 times more return on investment than Nexoptic Technology. However, National Bank of is 10.44 times less risky than Nexoptic Technology. It trades about -0.16 of its potential returns per unit of risk. Nexoptic Technology Corp is currently generating about -0.07 per unit of risk. If you would invest  13,740  in National Bank of on September 22, 2024 and sell it today you would lose (549.00) from holding National Bank of or give up 4.0% of portfolio value over 90 days.

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

National Bank of  vs.  Nexoptic Technology Corp

National Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, National Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nexoptic Technology Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexoptic Technology Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nexoptic Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Bank and Nexoptic Technology

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

The idea behind National Bank of and Nexoptic Technology Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.