Correlation Between MFF Capital and National Australia
Can any of the company-specific risk be diversified away by investing in both MFF Capital 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 MFF Capital and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFF Capital Investments and National Australia Bank, you can compare the effects of market volatilities on MFF Capital 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 MFF Capital with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and National Australia.
Diversification Opportunities for MFF Capital and National Australia
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MFF and National is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments 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 MFF Capital 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 MFF Capital Investments 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 MFF Capital i.e., MFF Capital and National Australia go up and down completely randomly.
Pair Corralation between MFF Capital and National Australia
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 3.59 times more return on investment than National Australia. However, MFF Capital is 3.59 times more volatile than National Australia Bank. It trades about 0.29 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 373.00 in MFF Capital Investments on September 12, 2024 and sell it today you would earn a total of 70.00 from holding MFF Capital Investments or generate 18.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
MFF Capital Investments vs. National Australia Bank
Performance |
| Timeline |
| MFF Capital Investments |
| National Australia Bank |
MFF Capital and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and National Australia
The main advantage of trading using opposite MFF Capital and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital 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.| MFF Capital vs. Fisher Paykel Healthcare | MFF Capital vs. EVE Health Group | MFF Capital vs. BTC Health Limited | MFF Capital vs. Mirrabooka Investments |
| National Australia vs. Iron Road | National Australia vs. Skycity Entertainment Group | National Australia vs. Srj Technologies Group | National Australia vs. My Foodie Box |
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 Correlations module to find global opportunities by holding instruments from different markets.
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