Correlation Between National Bank and Stryker

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

Diversification Opportunities for National Bank and Stryker

0.88

Correlation Coefficient

National Bank  Stryker

Very poor diversification

The 3 months correlation between National and Stryker is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of National Bank i.e., National Bank and Stryker go up and down completely randomly.

Pair Corralation between National Bank and Stryker

Assuming the 90 days horizon National Bank Holdings is expected to generate 1.82 times more return on investment than Stryker. However, National Bank is 1.82 times more volatile than Stryker. It trades about 0.1 of its potential returns per unit of risk. Stryker is currently generating about 0.15 per unit of risk. If you would invest  3,855  in National Bank Holdings on September 2, 2024 and sell it today you would earn a total of  625.00  from holding National Bank Holdings or generate 16.21% return on investment over 90 days.

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

National Bank Holdings  vs.  Stryker

National Bank Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Stryker

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stryker are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Stryker reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Bank and Stryker

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

The idea behind National Bank Holdings and Stryker 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.