Correlation Between National Bank and LINKBANCORP

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

Diversification Opportunities for National Bank and LINKBANCORP

0.92

Correlation Coefficient

National Bank  LINKBANCORP

Almost no diversification

The 3 months correlation between National and LINKBANCORP is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP 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 LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of National Bank i.e., National Bank and LINKBANCORP go up and down completely randomly.

Pair Corralation between National Bank and LINKBANCORP

Given the investment horizon of 90 days National Bank is expected to generate 1.84 times less return on investment than LINKBANCORP. In addition to that, National Bank is 1.21 times more volatile than LINKBANCORP. It trades about 0.08 of its total potential returns per unit of risk. LINKBANCORP is currently generating about 0.17 per unit of volatility. If you would invest  614.00  in LINKBANCORP on August 31, 2024 and sell it today you would earn a total of  148.00  from holding LINKBANCORP or generate 24.1% return on investment over 90 days.

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

National Bank Holdings  vs.  LINKBANCORP

National Bank Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, National Bank may actually be approaching a critical reversion point that can send shares even higher in December 2024.

LINKBANCORP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Bank and LINKBANCORP

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

The idea behind National Bank Holdings and LINKBANCORP 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.