Correlation Between Banco De and National Australia
Can any of the company-specific risk be diversified away by investing in both Banco De 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 Banco De and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco de Sabadell and National Australia Bank, you can compare the effects of market volatilities on Banco De 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 Banco De with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and National Australia.
Diversification Opportunities for Banco De and National Australia
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Banco and National is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Sabadell 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 Banco De 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 Banco de Sabadell 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 Banco De i.e., Banco De and National Australia go up and down completely randomly.
Pair Corralation between Banco De and National Australia
Assuming the 90 days horizon Banco de Sabadell is expected to generate 1.34 times more return on investment than National Australia. However, Banco De is 1.34 times more volatile than National Australia Bank. It trades about 0.09 of its potential returns per unit of risk. National Australia Bank is currently generating about -0.28 per unit of risk. If you would invest 185.00 in Banco de Sabadell on September 13, 2024 and sell it today you would earn a total of 9.00 from holding Banco de Sabadell or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Banco de Sabadell vs. National Australia Bank
Performance |
| Timeline |
| Banco de Sabadell |
| National Australia Bank |
Banco De and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco De and National Australia
The main advantage of trading using opposite Banco De and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De 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.| Banco De vs. ABN AMRO Bank | Banco De vs. Barclays PLC | Banco De vs. Bank of America | Banco De vs. Bank of America |
| National Australia vs. National Australia Bank | National Australia vs. China Construction Bank | National Australia vs. Bank of America | National Australia vs. ANZ Group Holdings |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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