Correlation Between Embark Education and National Australia
Can any of the company-specific risk be diversified away by investing in both Embark Education 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 Embark Education and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embark Education Group and National Australia Bank, you can compare the effects of market volatilities on Embark Education 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 Embark Education with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and National Australia.
Diversification Opportunities for Embark Education and National Australia
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Embark and National is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group 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 Embark Education 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 Embark Education Group 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 Embark Education i.e., Embark Education and National Australia go up and down completely randomly.
Pair Corralation between Embark Education and National Australia
Assuming the 90 days trading horizon Embark Education Group is expected to generate 8.01 times more return on investment than National Australia. However, Embark Education is 8.01 times more volatile than National Australia Bank. It trades about 0.13 of its potential returns per unit of risk. National Australia Bank is currently generating about -0.15 per unit of risk. If you would invest 75.00 in Embark Education Group on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Embark Education Group or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embark Education Group vs. National Australia Bank
Performance |
| Timeline |
| Embark Education |
| National Australia Bank |
Embark Education and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and National Australia
The main advantage of trading using opposite Embark Education and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education 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.| Embark Education vs. ARN Media Limited | Embark Education vs. Hutchison Telecommunications | Embark Education vs. COAST ENTERTAINMENT HOLDINGS | Embark Education vs. AiMedia Technologies |
| National Australia vs. Sandon Capital Investments | National Australia vs. Microequities Asset Management | National Australia vs. Premier Investments | National Australia vs. Hutchison Telecommunications |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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