Correlation Between Intuit and National Bank
Can any of the company-specific risk be diversified away by investing in both Intuit 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 Intuit and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuit Inc and National Bank Holdings, you can compare the effects of market volatilities on Intuit 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 Intuit with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuit and National Bank.
Diversification Opportunities for Intuit and National Bank
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Intuit and National is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc 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 Intuit 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 Intuit Inc 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 Intuit i.e., Intuit and National Bank go up and down completely randomly.
Pair Corralation between Intuit and National Bank
Given the investment horizon of 90 days Intuit Inc is expected to generate 0.61 times more return on investment than National Bank. However, Intuit Inc is 1.64 times less risky than National Bank. It trades about -0.19 of its potential returns per unit of risk. National Bank Holdings is currently generating about -0.13 per unit of risk. If you would invest 63,820 in Intuit Inc on January 23, 2024 and sell it today you would lose (2,843) from holding Intuit Inc or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Intuit Inc vs. National Bank Holdings
Performance |
| Timeline |
| Intuit Inc |
| National Bank Holdings |
Intuit and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intuit and National Bank
The main advantage of trading using opposite Intuit and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuit 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 Intuit Inc 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.| National Bank vs. Superior Plus Corp | National Bank vs. Origin Agritech | National Bank vs. Identiv | National Bank vs. INTUITIVE SURGICAL |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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