Correlation Between National Australia and Nanosonics
Can any of the company-specific risk be diversified away by investing in both National Australia and Nanosonics 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 Nanosonics 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 Nanosonics, you can compare the effects of market volatilities on National Australia and Nanosonics 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 Nanosonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Nanosonics.
Diversification Opportunities for National Australia and Nanosonics
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Nanosonics is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Nanosonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanosonics 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 Nanosonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanosonics has no effect on the direction of National Australia i.e., National Australia and Nanosonics go up and down completely randomly.
Pair Corralation between National Australia and Nanosonics
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.52 times more return on investment than Nanosonics. However, National Australia Bank is 1.93 times less risky than Nanosonics. It trades about 0.13 of its potential returns per unit of risk. Nanosonics is currently generating about 0.01 per unit of risk. If you would invest 3,808 in National Australia Bank on August 30, 2024 and sell it today you would earn a total of 111.00 from holding National Australia Bank or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Australia Bank vs. Nanosonics
Performance |
| Timeline |
| National Australia Bank |
| Nanosonics |
National Australia and Nanosonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Nanosonics
The main advantage of trading using opposite National Australia and Nanosonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Nanosonics 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 Nanosonics will offset losses from the drop in Nanosonics' long position.| National Australia vs. Nufarm Finance NZ | National Australia vs. Truscott Mining Corp | National Australia vs. Andean Silver Limited | National Australia vs. Queste Communications |
| Nanosonics vs. Regal Investment | Nanosonics vs. BKI Investment | Nanosonics vs. Computershare | Nanosonics vs. Australian United Investment |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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