Correlation Between Nicolet Bankshares and Banco De

Can any of the company-specific risk be diversified away by investing in both Nicolet Bankshares and Banco De 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 Nicolet Bankshares and Banco De into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nicolet Bankshares and Banco De Chile, you can compare the effects of market volatilities on Nicolet Bankshares and Banco De 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 Nicolet Bankshares with a short position of Banco De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicolet Bankshares and Banco De.

Diversification Opportunities for Nicolet Bankshares and Banco De

0.25

Correlation Coefficient

Nicolet Bankshares  Banco De

Modest diversification

The 3 months correlation between Nicolet and Banco is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nicolet Bankshares and Banco De Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco De Chile and Nicolet Bankshares 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 Nicolet Bankshares are associated (or correlated) with Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco De Chile has no effect on the direction of Nicolet Bankshares i.e., Nicolet Bankshares and Banco De go up and down completely randomly.

Pair Corralation between Nicolet Bankshares and Banco De

Considering the 90-day investment horizon Nicolet Bankshares is expected to generate 3.61 times less return on investment than Banco De. In addition to that, Nicolet Bankshares is 1.17 times more volatile than Banco De Chile. It trades about 0.01 of its total potential returns per unit of risk. Banco De Chile is currently generating about 0.04 per unit of volatility. If you would invest  1,632  in Banco De Chile on January 20, 2024 and sell it today you would earn a total of  564.00  from holding Banco De Chile or generate 34.56% return on investment over 90 days.

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

Nicolet Bankshares  vs.  Banco De Chile

Nicolet Bankshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nicolet Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Nicolet Bankshares is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Banco De Chile

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banco De Chile are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Banco De may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Nicolet Bankshares and Banco De

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

The idea behind Nicolet Bankshares and Banco De Chile 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.