Correlation Between National Australia and Thorney Technologies
Can any of the company-specific risk be diversified away by investing in both National Australia and Thorney 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 Thorney 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 Thorney Technologies, you can compare the effects of market volatilities on National Australia and Thorney 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 Thorney Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Thorney Technologies.
Diversification Opportunities for National Australia and Thorney Technologies
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Thorney is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Thorney Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thorney 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 Thorney Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thorney Technologies has no effect on the direction of National Australia i.e., National Australia and Thorney Technologies go up and down completely randomly.
Pair Corralation between National Australia and Thorney Technologies
Assuming the 90 days trading horizon National Australia Bank is expected to under-perform the Thorney Technologies. But the preferred stock apears to be less risky and, when comparing its historical volatility, National Australia Bank is 8.8 times less risky than Thorney Technologies. The preferred stock trades about -0.03 of its potential returns per unit of risk. The Thorney Technologies is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Thorney Technologies on October 29, 2024 and sell it today you would earn a total of 1.00 from holding Thorney Technologies or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Thorney Technologies
Performance |
| Timeline |
| National Australia Bank |
| Thorney Technologies |
National Australia and Thorney Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Thorney Technologies
The main advantage of trading using opposite National Australia and Thorney Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Thorney 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 Thorney Technologies will offset losses from the drop in Thorney Technologies' long position.| National Australia vs. Lendlease Group | National Australia vs. Vitura Health Limited | National Australia vs. BSP Financial Group | National Australia vs. Charter Hall Retail |
| Thorney Technologies vs. AiMedia Technologies | Thorney Technologies vs. ARN Media Limited | Thorney Technologies vs. Cleanaway Waste Management | Thorney Technologies vs. Kneomedia |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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