Correlation Between National Australia and Energy Technologies
Can any of the company-specific risk be diversified away by investing in both National Australia and Energy Technologies 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 Energy Technologies 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 Energy Technologies Limited, you can compare the effects of market volatilities on National Australia and Energy Technologies 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 Energy Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Energy Technologies.
Diversification Opportunities for National Australia and Energy Technologies
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Energy is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Energy Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Technologies 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 Energy Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Technologies has no effect on the direction of National Australia i.e., National Australia and Energy Technologies go up and down completely randomly.
Pair Corralation between National Australia and Energy Technologies
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.09 times more return on investment than Energy Technologies. However, National Australia Bank is 11.08 times less risky than Energy Technologies. It trades about 0.06 of its potential returns per unit of risk. Energy Technologies Limited is currently generating about -0.02 per unit of risk. If you would invest 9,626 in National Australia Bank on September 13, 2024 and sell it today you would earn a total of 773.00 from holding National Australia Bank or generate 8.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Energy Technologies Limited
Performance |
| Timeline |
| National Australia Bank |
| Energy Technologies |
National Australia and Energy Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Energy Technologies
The main advantage of trading using opposite National Australia and Energy Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Energy Technologies 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 Energy Technologies will offset losses from the drop in Energy Technologies' long position.| National Australia vs. Data3 | National Australia vs. Global Data Centre | National Australia vs. Mount Gibson Iron | National Australia vs. Viva Leisure |
| Energy Technologies vs. Aneka Tambang Tbk | Energy Technologies vs. National Australia Bank | Energy Technologies vs. Commonwealth Bank of | Energy Technologies vs. Commonwealth Bank of |
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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