Correlation Between Global Data and National Australia
Can any of the company-specific risk be diversified away by investing in both Global Data 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 Global Data and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Data Centre and National Australia Bank, you can compare the effects of market volatilities on Global Data 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 Global Data with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Data and National Australia.
Diversification Opportunities for Global Data and National Australia
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and National is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Global Data Centre 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 Global Data 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 Global Data Centre 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 Global Data i.e., Global Data and National Australia go up and down completely randomly.
Pair Corralation between Global Data and National Australia
Assuming the 90 days trading horizon Global Data Centre is expected to under-perform the National Australia. In addition to that, Global Data is 27.38 times more volatile than National Australia Bank. It trades about -0.14 of its total potential returns per unit of risk. National Australia Bank is currently generating about 0.09 per unit of volatility. If you would invest 10,307 in National Australia Bank on September 13, 2024 and sell it today you would earn a total of 92.00 from holding National Australia Bank or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Data Centre vs. National Australia Bank
Performance |
| Timeline |
| Global Data Centre |
| National Australia Bank |
Global Data and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Data and National Australia
The main advantage of trading using opposite Global Data and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Data 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.| Global Data vs. Aneka Tambang Tbk | Global Data vs. Commonwealth Bank | Global Data vs. BHP Group Limited | Global Data vs. Rio Tinto |
| National Australia vs. Data3 | National Australia vs. Global Data Centre | National Australia vs. Mount Gibson Iron | National Australia vs. Viva Leisure |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |