Correlation Between National Australia and Advanced Braking
Can any of the company-specific risk be diversified away by investing in both National Australia and Advanced Braking 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 Advanced Braking 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 Advanced Braking Technology, you can compare the effects of market volatilities on National Australia and Advanced Braking 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 Advanced Braking. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Advanced Braking.
Diversification Opportunities for National Australia and Advanced Braking
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Advanced is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Advanced Braking Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Braking Tec 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 Advanced Braking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Braking Tec has no effect on the direction of National Australia i.e., National Australia and Advanced Braking go up and down completely randomly.
Pair Corralation between National Australia and Advanced Braking
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.12 times more return on investment than Advanced Braking. However, National Australia Bank is 8.49 times less risky than Advanced Braking. It trades about 0.07 of its potential returns per unit of risk. Advanced Braking Technology is currently generating about -0.07 per unit of risk. If you would invest 10,360 in National Australia Bank on October 14, 2024 and sell it today you would earn a total of 35.00 from holding National Australia Bank or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Advanced Braking Technology
Performance |
| Timeline |
| National Australia Bank |
| Advanced Braking Tec |
National Australia and Advanced Braking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Advanced Braking
The main advantage of trading using opposite National Australia and Advanced Braking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Advanced Braking 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 Advanced Braking will offset losses from the drop in Advanced Braking's long position.| National Australia vs. Super Retail Group | National Australia vs. Centrex Metals | National Australia vs. Sky Metals | National Australia vs. ACDC Metals |
| Advanced Braking vs. Perseus Mining | Advanced Braking vs. Sky Metals | Advanced Braking vs. Richmond Vanadium Technology | Advanced Braking vs. Truscott Mining Corp |
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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