Correlation Between Falcon Metals and National Australia
Can any of the company-specific risk be diversified away by investing in both Falcon 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 Falcon 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 Falcon Metals and National Australia Bank, you can compare the effects of market volatilities on Falcon 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 Falcon Metals with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and National Australia.
Diversification Opportunities for Falcon Metals and National Australia
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Falcon and National is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Falcon 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 Falcon 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 Falcon 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 Falcon Metals i.e., Falcon Metals and National Australia go up and down completely randomly.
Pair Corralation between Falcon Metals and National Australia
Assuming the 90 days trading horizon Falcon Metals is expected to generate 16.79 times more return on investment than National Australia. However, Falcon Metals is 16.79 times more volatile than National Australia Bank. It trades about 0.02 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.07 per unit of risk. If you would invest 13.00 in Falcon Metals on October 17, 2024 and sell it today you would earn a total of 0.00 from holding Falcon Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. National Australia Bank
Performance |
| Timeline |
| Falcon Metals |
| National Australia Bank |
Falcon Metals and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and National Australia
The main advantage of trading using opposite Falcon Metals and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon 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.| Falcon Metals vs. Sandon Capital Investments | Falcon Metals vs. Aurelia Metals | Falcon Metals vs. MFF Capital Investments | Falcon Metals vs. Hotel Property Investments |
| National Australia vs. Falcon Metals | National Australia vs. Black Rock Mining | National Australia vs. Stelar Metals | National Australia vs. FireFly 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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