Correlation Between Charter Hall and National Australia
Can any of the company-specific risk be diversified away by investing in both Charter Hall 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 Charter Hall and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Hall Retail and National Australia Bank, you can compare the effects of market volatilities on Charter Hall 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 Charter Hall with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and National Australia.
Diversification Opportunities for Charter Hall and National Australia
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charter and National is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail 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 Charter Hall 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 Charter Hall Retail 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 Charter Hall i.e., Charter Hall and National Australia go up and down completely randomly.
Pair Corralation between Charter Hall and National Australia
Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the National Australia. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Retail is 1.06 times less risky than National Australia. The stock trades about -0.05 of its potential returns per unit of risk. The National Australia Bank is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,713 in National Australia Bank on August 29, 2024 and sell it today you would earn a total of 201.00 from holding National Australia Bank or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Charter Hall Retail vs. National Australia Bank
Performance |
| Timeline |
| Charter Hall Retail |
| National Australia Bank |
Charter Hall and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and National Australia
The main advantage of trading using opposite Charter Hall and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall 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.| Charter Hall vs. Australian Unity Office | Charter Hall vs. Champion Iron | Charter Hall vs. Ridley | Charter Hall vs. Peel Mining |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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