Correlation Between De Grey and National Australia
Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and National Australia Bank, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and National Australia.
Diversification Opportunities for De Grey and National Australia
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between DEG and National is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining 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 De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and National Australia go up and down completely randomly.
Pair Corralation between De Grey and National Australia
Assuming the 90 days trading horizon De Grey Mining is expected to generate 7.35 times more return on investment than National Australia. However, De Grey is 7.35 times more volatile than National Australia Bank. It trades about 0.07 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.08 per unit of risk. If you would invest 124.00 in De Grey Mining on September 15, 2024 and sell it today you would earn a total of 66.00 from holding De Grey Mining or generate 53.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. National Australia Bank
Performance |
| Timeline |
| De Grey Mining |
| National Australia Bank |
De Grey and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and National Australia
The main advantage of trading using opposite De Grey and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.| De Grey vs. Truscott Mining Corp | De Grey vs. Aspire Mining | De Grey vs. Globe Metals Mining | De Grey vs. Aussie Broadband |
| National Australia vs. Westpac Banking | National Australia vs. De Grey Mining | National Australia vs. Pointsbet Holdings | National Australia vs. Indiana Resources |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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