Correlation Between Amedeo Air and NatWest Group
Can any of the company-specific risk be diversified away by investing in both Amedeo Air 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 Amedeo Air and NatWest Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amedeo Air Four and NatWest Group PLC, you can compare the effects of market volatilities on Amedeo Air 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 Amedeo Air with a short position of NatWest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedeo Air and NatWest Group.
Diversification Opportunities for Amedeo Air and NatWest Group
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amedeo and NatWest is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amedeo Air Four 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 Amedeo Air 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 Amedeo Air Four 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 Amedeo Air i.e., Amedeo Air and NatWest Group go up and down completely randomly.
Pair Corralation between Amedeo Air and NatWest Group
Assuming the 90 days trading horizon Amedeo Air is expected to generate 1.29 times less return on investment than NatWest Group. But when comparing it to its historical volatility, Amedeo Air Four is 1.93 times less risky than NatWest Group. It trades about 0.11 of its potential returns per unit of risk. NatWest Group PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 26,067 in NatWest Group PLC on September 2, 2024 and sell it today you would earn a total of 14,203 from holding NatWest Group PLC or generate 54.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amedeo Air Four vs. NatWest Group PLC
Performance |
| Timeline |
| Amedeo Air Four |
| NatWest Group PLC |
Amedeo Air and NatWest Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amedeo Air and NatWest Group
The main advantage of trading using opposite Amedeo Air and NatWest Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedeo Air 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.| Amedeo Air vs. Spotify Technology SA | Amedeo Air vs. Air Products Chemicals | Amedeo Air vs. Cizzle Biotechnology Holdings | Amedeo Air vs. Finnair Oyj |
| NatWest Group vs. Samsung Electronics Co | NatWest Group vs. Iron Mountain | NatWest Group vs. InterContinental Hotels Group | NatWest Group vs. Veolia Environnement VE |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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