Correlation Between Midway and National Australia
Can any of the company-specific risk be diversified away by investing in both Midway 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 Midway and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midway and National Australia Bank, you can compare the effects of market volatilities on Midway 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 Midway with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midway and National Australia.
Diversification Opportunities for Midway and National Australia
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Midway and National is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Midway 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 Midway 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 Midway 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 Midway i.e., Midway and National Australia go up and down completely randomly.
Pair Corralation between Midway and National Australia
Assuming the 90 days trading horizon Midway is expected to generate 11.98 times more return on investment than National Australia. However, Midway is 11.98 times more volatile than National Australia Bank. It trades about 0.2 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.0 per unit of risk. If you would invest 80.00 in Midway on September 1, 2024 and sell it today you would earn a total of 45.00 from holding Midway or generate 56.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Midway vs. National Australia Bank
Performance |
| Timeline |
| Midway |
| National Australia Bank |
Midway and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midway and National Australia
The main advantage of trading using opposite Midway and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midway 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.| Midway vs. Hudson Investment Group | Midway vs. EMvision Medical Devices | Midway vs. REGAL ASIAN INVESTMENTS | Midway vs. Carlton Investments |
| National Australia vs. Westpac Banking | National Australia vs. Imricor Medical Systems | National Australia vs. Midway | National Australia vs. Aristocrat 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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