Correlation Between Aristocrat Leisure and National Australia
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and National Australia 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 Aristocrat Leisure and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and National Australia Bank, you can compare the effects of market volatilities on Aristocrat Leisure and National Australia 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 Aristocrat Leisure with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and National Australia.
Diversification Opportunities for Aristocrat Leisure and National Australia
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aristocrat and National is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and National Australia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Australia Bank and Aristocrat Leisure 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 Aristocrat Leisure are associated (or correlated) with National Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Australia Bank has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and National Australia go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and National Australia
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 3.77 times more return on investment than National Australia. However, Aristocrat Leisure is 3.77 times more volatile than National Australia Bank. It trades about 0.11 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.06 per unit of risk. If you would invest 3,278 in Aristocrat Leisure on September 3, 2024 and sell it today you would earn a total of 3,497 from holding Aristocrat Leisure or generate 106.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure vs. National Australia Bank
Performance |
| Timeline |
| Aristocrat Leisure |
| National Australia Bank |
Aristocrat Leisure and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and National Australia
The main advantage of trading using opposite Aristocrat Leisure and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, National Australia 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 Australia will offset losses from the drop in National Australia's long position.| Aristocrat Leisure vs. Westpac Banking | Aristocrat Leisure vs. Champion Iron | Aristocrat Leisure vs. iShares Global Healthcare | Aristocrat Leisure vs. Peel Mining |
| National Australia vs. Leeuwin Metals | National Australia vs. GreenX Metals | National Australia vs. DY6 Metals | National Australia vs. ACDC Metals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |