Correlation Between National Australia and Ashley Services
Can any of the company-specific risk be diversified away by investing in both National Australia and Ashley Services 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 Ashley Services 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 Ashley Services Group, you can compare the effects of market volatilities on National Australia and Ashley Services 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 Ashley Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Ashley Services.
Diversification Opportunities for National Australia and Ashley Services
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Ashley is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Ashley Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashley Services Group 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 Ashley Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashley Services Group has no effect on the direction of National Australia i.e., National Australia and Ashley Services go up and down completely randomly.
Pair Corralation between National Australia and Ashley Services
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.05 times more return on investment than Ashley Services. However, National Australia Bank is 19.5 times less risky than Ashley Services. It trades about 0.08 of its potential returns per unit of risk. Ashley Services Group is currently generating about -0.02 per unit of risk. If you would invest 9,875 in National Australia Bank on September 12, 2024 and sell it today you would earn a total of 548.00 from holding National Australia Bank or generate 5.55% 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. Ashley Services Group
Performance |
| Timeline |
| National Australia Bank |
| Ashley Services Group |
National Australia and Ashley Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Ashley Services
The main advantage of trading using opposite National Australia and Ashley Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Ashley Services 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 Ashley Services will offset losses from the drop in Ashley Services' long position.| National Australia vs. Diversified United Investment | National Australia vs. Charter Hall Retail | National Australia vs. REGAL ASIAN INVESTMENTS | National Australia vs. MFF Capital Investments |
| Ashley Services vs. Aussie Broadband | Ashley Services vs. Wt Financial Group | Ashley Services vs. Pioneer Credit | Ashley Services 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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