Correlation Between Bio Path and National Bank

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Can any of the company-specific risk be diversified away by investing in both Bio Path and National Bank 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 Bio Path and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bio Path Holdings and National Bank Holdings, you can compare the effects of market volatilities on Bio Path and National Bank 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 Bio Path with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Path and National Bank.

Diversification Opportunities for Bio Path and National Bank

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bio and National is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bio Path Holdings and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings and Bio Path 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 Bio Path Holdings are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Bio Path i.e., Bio Path and National Bank go up and down completely randomly.

Pair Corralation between Bio Path and National Bank

Given the investment horizon of 90 days Bio Path Holdings is expected to under-perform the National Bank. In addition to that, Bio Path is 3.34 times more volatile than National Bank Holdings. It trades about -0.04 of its total potential returns per unit of risk. National Bank Holdings is currently generating about 0.01 per unit of volatility. If you would invest  3,278  in National Bank Holdings on December 30, 2023 and sell it today you would lose (98.00) from holding National Bank Holdings or give up 2.99% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy97.82%
ValuesDaily Returns

Bio Path Holdings  vs.  National Bank Holdings

 Performance 
       Timeline  
Bio Path Holdings 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Bio Path Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
National Bank Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days National Bank Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, National Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bio Path and National Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bio Path and National Bank

The main advantage of trading using opposite Bio Path and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Path position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.
The idea behind Bio Path Holdings and National Bank Holdings 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.
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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