Correlation Between National Bank and International Business

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both National Bank and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on National Bank and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and International Business.

Diversification Opportunities for National Bank and International Business

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between National and International is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of National Bank i.e., National Bank and International Business go up and down completely randomly.

Pair Corralation between National Bank and International Business

Assuming the 90 days horizon National Bank Holdings is expected to generate 1.1 times more return on investment than International Business. However, National Bank is 1.1 times more volatile than International Business Machines. It trades about 0.17 of its potential returns per unit of risk. International Business Machines is currently generating about 0.11 per unit of risk. If you would invest  2,980  in National Bank Holdings on December 29, 2023 and sell it today you would earn a total of  160.00  from holding National Bank Holdings or generate 5.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

National Bank Holdings  vs.  International Business Machine

 Performance 
       Timeline  
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.
International Business 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

National Bank and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National Bank and International Business

The main advantage of trading using opposite National Bank and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
The idea behind National Bank Holdings and International Business Machines 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Equity Valuation
Check real value of public entities based on technical and fundamental data
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Fundamental Analysis
View fundamental data based on most recent published financial statements