Correlation Between National Australia and Bluescope Steel
Can any of the company-specific risk be diversified away by investing in both National Australia and Bluescope Steel 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 Bluescope Steel 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 Bluescope Steel, you can compare the effects of market volatilities on National Australia and Bluescope Steel 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 Bluescope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Bluescope Steel.
Diversification Opportunities for National Australia and Bluescope Steel
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Bluescope is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Bluescope Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluescope Steel 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 Bluescope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluescope Steel has no effect on the direction of National Australia i.e., National Australia and Bluescope Steel go up and down completely randomly.
Pair Corralation between National Australia and Bluescope Steel
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.12 times more return on investment than Bluescope Steel. However, National Australia Bank is 8.02 times less risky than Bluescope Steel. It trades about 0.03 of its potential returns per unit of risk. Bluescope Steel is currently generating about -0.05 per unit of risk. If you would invest 10,462 in National Australia Bank on October 1, 2024 and sell it today you would earn a total of 35.00 from holding National Australia Bank or generate 0.33% 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. Bluescope Steel
Performance |
| Timeline |
| National Australia Bank |
| Bluescope Steel |
National Australia and Bluescope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Bluescope Steel
The main advantage of trading using opposite National Australia and Bluescope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Bluescope Steel 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 Bluescope Steel will offset losses from the drop in Bluescope Steel's long position.| National Australia vs. Hutchison Telecommunications | National Australia vs. Beston Global Food | National Australia vs. Phoslock Environmental Technologies | National Australia vs. Queste Communications |
| Bluescope Steel vs. Home Consortium | Bluescope Steel vs. Richmond Vanadium Technology | Bluescope Steel vs. Flagship Investments | Bluescope Steel vs. Sandon Capital Investments |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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