Correlation Between National Bank and SHIP HEALTHCARE

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

By analyzing existing cross correlation between National Bank Holdings and SHIP HEALTHCARE HLDGINC, you can compare the effects of market volatilities on National Bank and SHIP HEALTHCARE 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 SHIP HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and SHIP HEALTHCARE.

Diversification Opportunities for National Bank and SHIP HEALTHCARE

-0.66

Correlation Coefficient

National Bank  SHIP HEALTHCARE

Excellent diversification

The 3 months correlation between National and SHIP is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and SHIP HEALTHCARE HLDGINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIP HEALTHCARE HLDGINC 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 Holdings are associated (or correlated) with SHIP HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIP HEALTHCARE HLDGINC has no effect on the direction of National Bank i.e., National Bank and SHIP HEALTHCARE go up and down completely randomly.

Pair Corralation between National Bank and SHIP HEALTHCARE

Assuming the 90 days horizon National Bank Holdings is expected to generate 1.75 times more return on investment than SHIP HEALTHCARE. However, National Bank is 1.75 times more volatile than SHIP HEALTHCARE HLDGINC. It trades about 0.12 of its potential returns per unit of risk. SHIP HEALTHCARE HLDGINC is currently generating about 0.04 per unit of risk. If you would invest  3,637  in National Bank Holdings on September 17, 2024 and sell it today you would earn a total of  683.00  from holding National Bank Holdings or generate 18.78% return on investment over 90 days.

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

National Bank Holdings  vs.  SHIP HEALTHCARE HLDGINC

National Bank Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SHIP HEALTHCARE HLDGINC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SHIP HEALTHCARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Bank and SHIP HEALTHCARE

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

The idea behind National Bank Holdings and SHIP HEALTHCARE HLDGINC 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.