Correlation Between National Australia and 1414 Degrees
Can any of the company-specific risk be diversified away by investing in both National Australia and 1414 Degrees 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 Australia and 1414 Degrees into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Australia Bank and 1414 Degrees, you can compare the effects of market volatilities on National Australia and 1414 Degrees 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 Australia with a short position of 1414 Degrees. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and 1414 Degrees.
Diversification Opportunities for National Australia and 1414 Degrees
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and 1414 is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and 1414 Degrees in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1414 Degrees and National Australia 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 Australia Bank are associated (or correlated) with 1414 Degrees. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1414 Degrees has no effect on the direction of National Australia i.e., National Australia and 1414 Degrees go up and down completely randomly.
Pair Corralation between National Australia and 1414 Degrees
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.16 times more return on investment than 1414 Degrees. However, National Australia Bank is 6.09 times less risky than 1414 Degrees. It trades about 0.14 of its potential returns per unit of risk. 1414 Degrees is currently generating about 0.01 per unit of risk. If you would invest 2,338 in National Australia Bank on September 2, 2024 and sell it today you would earn a total of 1,572 from holding National Australia Bank or generate 67.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. 1414 Degrees
Performance |
| Timeline |
| National Australia Bank |
| 1414 Degrees |
National Australia and 1414 Degrees Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and 1414 Degrees
The main advantage of trading using opposite National Australia and 1414 Degrees positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, 1414 Degrees 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 1414 Degrees will offset losses from the drop in 1414 Degrees' long position.| National Australia vs. K2 Asset Management | National Australia vs. Hudson Investment Group | National Australia vs. REGAL ASIAN INVESTMENTS | National Australia vs. Olivers Real Food |
| 1414 Degrees vs. Commonwealth Bank of | 1414 Degrees vs. EROAD | 1414 Degrees vs. Qbe Insurance Group | 1414 Degrees vs. Skycity Entertainment Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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