Correlation Between National Retail and CSL
Can any of the company-specific risk be diversified away by investing in both National Retail and CSL 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 National Retail and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and CSL LTD SPONADR, you can compare the effects of market volatilities on National Retail and CSL 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 National Retail with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and CSL.
Diversification Opportunities for National Retail and CSL
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and CSL is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR and National Retail 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 National Retail Properties are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL LTD SPONADR has no effect on the direction of National Retail i.e., National Retail and CSL go up and down completely randomly.
Pair Corralation between National Retail and CSL
Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.88 times more return on investment than CSL. However, National Retail Properties is 1.13 times less risky than CSL. It trades about 0.01 of its potential returns per unit of risk. CSL LTD SPONADR is currently generating about 0.0 per unit of risk. If you would invest 3,807 in National Retail Properties on September 23, 2024 and sell it today you would earn a total of 15.00 from holding National Retail Properties or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. CSL LTD SPONADR
Performance |
| Timeline |
| National Retail Prop |
| CSL LTD SPONADR |
National Retail and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and CSL
The main advantage of trading using opposite National Retail and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
| CSL vs. LIFEWAY FOODS | CSL vs. National Beverage Corp | CSL vs. Thai Beverage Public | CSL vs. National Retail Properties |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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