Correlation Between National Retail and Indutrade
Can any of the company-specific risk be diversified away by investing in both National Retail and Indutrade 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 Indutrade 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 Indutrade AB, you can compare the effects of market volatilities on National Retail and Indutrade 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 Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Indutrade.
Diversification Opportunities for National Retail and Indutrade
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Indutrade is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of National Retail i.e., National Retail and Indutrade go up and down completely randomly.
Pair Corralation between National Retail and Indutrade
Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.67 times more return on investment than Indutrade. However, National Retail Properties is 1.5 times less risky than Indutrade. It trades about 0.05 of its potential returns per unit of risk. Indutrade AB is currently generating about 0.02 per unit of risk. If you would invest 4,014 in National Retail Properties on September 13, 2024 and sell it today you would earn a total of 42.00 from holding National Retail Properties or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. Indutrade AB
Performance |
| Timeline |
| National Retail Prop |
| Indutrade AB |
National Retail and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Indutrade
The main advantage of trading using opposite National Retail and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
| Indutrade vs. WATSCO INC B | Indutrade vs. Superior Plus Corp | Indutrade vs. SIVERS SEMICONDUCTORS AB | Indutrade vs. NorAm Drilling AS |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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