Correlation Between AcadeMedia and NatWest Group
Can any of the company-specific risk be diversified away by investing in both AcadeMedia and NatWest Group 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 AcadeMedia and NatWest Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AcadeMedia AB and NatWest Group PLC, you can compare the effects of market volatilities on AcadeMedia and NatWest Group 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 AcadeMedia with a short position of NatWest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and NatWest Group.
Diversification Opportunities for AcadeMedia and NatWest Group
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AcadeMedia and NatWest is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB and NatWest Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NatWest Group PLC and AcadeMedia 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 AcadeMedia AB are associated (or correlated) with NatWest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NatWest Group PLC has no effect on the direction of AcadeMedia i.e., AcadeMedia and NatWest Group go up and down completely randomly.
Pair Corralation between AcadeMedia and NatWest Group
Assuming the 90 days trading horizon AcadeMedia is expected to generate 7.6 times less return on investment than NatWest Group. In addition to that, AcadeMedia is 1.02 times more volatile than NatWest Group PLC. It trades about 0.03 of its total potential returns per unit of risk. NatWest Group PLC is currently generating about 0.24 per unit of volatility. If you would invest 33,210 in NatWest Group PLC on September 12, 2024 and sell it today you would earn a total of 7,720 from holding NatWest Group PLC or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AcadeMedia AB vs. NatWest Group PLC
Performance |
| Timeline |
| AcadeMedia AB |
| NatWest Group PLC |
AcadeMedia and NatWest Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AcadeMedia and NatWest Group
The main advantage of trading using opposite AcadeMedia and NatWest Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AcadeMedia position performs unexpectedly, NatWest Group 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 NatWest Group will offset losses from the drop in NatWest Group's long position.| AcadeMedia vs. Samsung Electronics Co | AcadeMedia vs. Samsung Electronics Co | AcadeMedia vs. Hyundai Motor | AcadeMedia vs. Reliance Industries Ltd |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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