Correlation Between Bank of the and National Reinsurance

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

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

Diversification Opportunities for Bank of the and National Reinsurance

0.14

Correlation Coefficient

Bank of the  National Reinsurance

Average diversification

The 3 months correlation between Bank and National is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and Bank of the 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 Bank of the are associated (or correlated) with National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of Bank of the i.e., Bank of the and National Reinsurance go up and down completely randomly.

Pair Corralation between Bank of the and National Reinsurance

Assuming the 90 days trading horizon Bank of the is expected to under-perform the National Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, Bank of the is 1.49 times less risky than National Reinsurance. The stock trades about -0.07 of its potential returns per unit of risk. The National Reinsurance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  54.00  in National Reinsurance on April 20, 2025 and sell it today you would earn a total of  8.00  from holding National Reinsurance or generate 14.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Bank of the  vs.  National Reinsurance

Bank of the

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of the has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

National Reinsurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Reinsurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, National Reinsurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of the and National Reinsurance

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

The idea behind Bank of the and National Reinsurance 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.