Correlation Between National Bank and Quebecor

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

By analyzing existing cross correlation between National Bank of and Quebecor, you can compare the effects of market volatilities on National Bank and Quebecor 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 Quebecor. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Quebecor.

Diversification Opportunities for National Bank and Quebecor

-0.44

Correlation Coefficient

National Bank  Quebecor

Very good diversification

The 3 months correlation between National and Quebecor is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Quebecor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quebecor 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 of are associated (or correlated) with Quebecor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quebecor has no effect on the direction of National Bank i.e., National Bank and Quebecor go up and down completely randomly.

Pair Corralation between National Bank and Quebecor

Assuming the 90 days horizon National Bank of is expected to generate 0.23 times more return on investment than Quebecor. However, National Bank of is 4.28 times less risky than Quebecor. It trades about 0.41 of its potential returns per unit of risk. Quebecor is currently generating about 0.02 per unit of risk. If you would invest  12,815  in National Bank of on September 4, 2024 and sell it today you would earn a total of  1,182  from holding National Bank of or generate 9.22% return on investment over 90 days.

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

National Bank of  vs.  Quebecor

National Bank

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, National Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

Quebecor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quebecor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Quebecor is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Bank and Quebecor

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

The idea behind National Bank of and Quebecor 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.