Correlation Between National Australia and Alternative Investment
Can any of the company-specific risk be diversified away by investing in both National Australia and Alternative Investment 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 Alternative Investment 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 Alternative Investment Trust, you can compare the effects of market volatilities on National Australia and Alternative Investment 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 Alternative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Alternative Investment.
Diversification Opportunities for National Australia and Alternative Investment
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Alternative is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment 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 Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of National Australia i.e., National Australia and Alternative Investment go up and down completely randomly.
Pair Corralation between National Australia and Alternative Investment
Assuming the 90 days trading horizon National Australia is expected to generate 2.62 times less return on investment than Alternative Investment. But when comparing it to its historical volatility, National Australia Bank is 5.64 times less risky than Alternative Investment. It trades about 0.09 of its potential returns per unit of risk. Alternative Investment Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 128.00 in Alternative Investment Trust on August 25, 2024 and sell it today you would earn a total of 17.00 from holding Alternative Investment Trust or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
National Australia Bank vs. Alternative Investment Trust
Performance |
| Timeline |
| National Australia Bank |
| Alternative Investment |
National Australia and Alternative Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Alternative Investment
The main advantage of trading using opposite National Australia and Alternative Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Alternative Investment 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 Alternative Investment will offset losses from the drop in Alternative Investment's long position.| National Australia vs. DY6 Metals | National Australia vs. Perseus Mining | National Australia vs. Aurelia Metals | National Australia vs. Metro Mining |
| Alternative Investment vs. National Australia Bank | Alternative Investment vs. National Australia Bank | Alternative Investment vs. Westpac Banking | Alternative Investment vs. National Australia Bank |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |