Correlation Between M3 Mining and National Australia
Can any of the company-specific risk be diversified away by investing in both M3 Mining 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 M3 Mining and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Mining and National Australia Bank, you can compare the effects of market volatilities on M3 Mining 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 M3 Mining with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and National Australia.
Diversification Opportunities for M3 Mining and National Australia
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between M3M and National is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining 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 M3 Mining 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 M3 Mining 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 M3 Mining i.e., M3 Mining and National Australia go up and down completely randomly.
Pair Corralation between M3 Mining and National Australia
Assuming the 90 days trading horizon M3 Mining is expected to under-perform the National Australia. In addition to that, M3 Mining is 16.04 times more volatile than National Australia Bank. It trades about -0.02 of its total potential returns per unit of risk. National Australia Bank is currently generating about 0.07 per unit of volatility. If you would invest 9,480 in National Australia Bank on October 21, 2024 and sell it today you would earn a total of 996.00 from holding National Australia Bank or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
M3 Mining vs. National Australia Bank
Performance |
| Timeline |
| M3 Mining |
| National Australia Bank |
M3 Mining and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Mining and National Australia
The main advantage of trading using opposite M3 Mining and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining 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.| M3 Mining vs. Computershare | M3 Mining vs. Hotel Property Investments | M3 Mining vs. Argo Investments | M3 Mining vs. Clime Investment Management |
| National Australia vs. Torque Metals | National Australia vs. Sky Metals | National Australia vs. Kneomedia | National Australia vs. oOhMedia |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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