Correlation Between Indiana Resources and National Australia
Can any of the company-specific risk be diversified away by investing in both Indiana Resources 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 Indiana Resources and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indiana Resources and National Australia Bank, you can compare the effects of market volatilities on Indiana Resources 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 Indiana Resources with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indiana Resources and National Australia.
Diversification Opportunities for Indiana Resources and National Australia
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Indiana and National is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Indiana Resources 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 Indiana Resources 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 Indiana Resources 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 Indiana Resources i.e., Indiana Resources and National Australia go up and down completely randomly.
Pair Corralation between Indiana Resources and National Australia
Assuming the 90 days trading horizon Indiana Resources is expected to generate 6.96 times more return on investment than National Australia. However, Indiana Resources is 6.96 times more volatile than National Australia Bank. It trades about 0.1 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 3.11 in Indiana Resources on September 15, 2024 and sell it today you would earn a total of 2.99 from holding Indiana Resources or generate 96.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indiana Resources vs. National Australia Bank
Performance |
| Timeline |
| Indiana Resources |
| National Australia Bank |
Indiana Resources and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indiana Resources and National Australia
The main advantage of trading using opposite Indiana Resources and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indiana Resources 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.| Indiana Resources vs. Super Retail Group | Indiana Resources vs. MFF Capital Investments | Indiana Resources vs. Pinnacle Investment Management | Indiana Resources vs. Premier Investments |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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