Correlation Between Computershare and National Australia
Can any of the company-specific risk be diversified away by investing in both Computershare 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 Computershare and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computershare and National Australia Bank, you can compare the effects of market volatilities on Computershare 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 Computershare with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computershare and National Australia.
Diversification Opportunities for Computershare and National Australia
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Computershare and National is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Computershare 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 Computershare 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 Computershare 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 Computershare i.e., Computershare and National Australia go up and down completely randomly.
Pair Corralation between Computershare and National Australia
Assuming the 90 days trading horizon Computershare is expected to generate 1.46 times less return on investment than National Australia. In addition to that, Computershare is 1.29 times more volatile than National Australia Bank. It trades about 0.04 of its total potential returns per unit of risk. National Australia Bank is currently generating about 0.07 per unit of volatility. If you would invest 2,708 in National Australia Bank on August 29, 2024 and sell it today you would earn a total of 1,206 from holding National Australia Bank or generate 44.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computershare vs. National Australia Bank
Performance |
| Timeline |
| Computershare |
| National Australia Bank |
Computershare and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computershare and National Australia
The main advantage of trading using opposite Computershare and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computershare 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.| Computershare vs. Aussie Broadband | Computershare vs. EROAD | Computershare vs. Treasury Wine Estates | Computershare vs. Sandon Capital Investments |
| National Australia vs. EP Financial Group | National Australia vs. Janison Education Group | National Australia vs. Charter Hall Retail | National Australia vs. Credit Clear |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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