Correlation Between National Atomic and National Grid
Can any of the company-specific risk be diversified away by investing in both National Atomic and National Grid 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 National Atomic and National Grid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Atomic Co and National Grid PLC, you can compare the effects of market volatilities on National Atomic and National Grid 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 National Atomic with a short position of National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Atomic and National Grid.
Diversification Opportunities for National Atomic and National Grid
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and National is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co and National Grid PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid PLC and National Atomic 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 National Atomic Co are associated (or correlated) with National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid PLC has no effect on the direction of National Atomic i.e., National Atomic and National Grid go up and down completely randomly.
Pair Corralation between National Atomic and National Grid
Assuming the 90 days trading horizon National Atomic Co is expected to generate 1.32 times more return on investment than National Grid. However, National Atomic is 1.32 times more volatile than National Grid PLC. It trades about 0.16 of its potential returns per unit of risk. National Grid PLC is currently generating about 0.0 per unit of risk. If you would invest 3,845 in National Atomic Co on August 29, 2024 and sell it today you would earn a total of 190.00 from holding National Atomic Co or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Atomic Co vs. National Grid PLC
Performance |
| Timeline |
| National Atomic |
| National Grid PLC |
National Atomic and National Grid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Atomic and National Grid
The main advantage of trading using opposite National Atomic and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Atomic position performs unexpectedly, National Grid 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 Grid will offset losses from the drop in National Grid's long position.| National Atomic vs. Zoom Video Communications | National Atomic vs. AfriTin Mining | National Atomic vs. Silvercorp Metals | National Atomic vs. McEwen Mining |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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