Correlation Between Centaurus Metals and National Australia
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals 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 Centaurus Metals and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals and National Australia Bank, you can compare the effects of market volatilities on Centaurus Metals 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 Centaurus Metals with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and National Australia.
Diversification Opportunities for Centaurus Metals and National Australia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Centaurus and National is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals 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 Centaurus Metals 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 Centaurus Metals 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 Centaurus Metals i.e., Centaurus Metals and National Australia go up and down completely randomly.
Pair Corralation between Centaurus Metals and National Australia
Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the National Australia. In addition to that, Centaurus Metals is 17.5 times more volatile than National Australia Bank. It trades about -0.01 of its total potential returns per unit of risk. National Australia Bank is currently generating about 0.09 per unit of volatility. If you would invest 9,568 in National Australia Bank on August 31, 2024 and sell it today you would earn a total of 926.00 from holding National Australia Bank or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaurus Metals vs. National Australia Bank
Performance |
| Timeline |
| Centaurus Metals |
| National Australia Bank |
Centaurus Metals and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and National Australia
The main advantage of trading using opposite Centaurus Metals and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals 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.| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. De Grey Mining |
| National Australia vs. Pinnacle Investment Management | National Australia vs. MFF Capital Investments | National Australia vs. Diversified United Investment | National Australia vs. Centaurus 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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