Correlation Between National Australia and Havilah Resources
Can any of the company-specific risk be diversified away by investing in both National Australia and Havilah Resources 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 Havilah Resources 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 Havilah Resources, you can compare the effects of market volatilities on National Australia and Havilah Resources 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 Havilah Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Havilah Resources.
Diversification Opportunities for National Australia and Havilah Resources
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Havilah is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Havilah Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Havilah Resources 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 Havilah Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Havilah Resources has no effect on the direction of National Australia i.e., National Australia and Havilah Resources go up and down completely randomly.
Pair Corralation between National Australia and Havilah Resources
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.06 times more return on investment than Havilah Resources. However, National Australia Bank is 15.6 times less risky than Havilah Resources. It trades about 0.08 of its potential returns per unit of risk. Havilah Resources is currently generating about 0.0 per unit of risk. If you would invest 9,495 in National Australia Bank on September 3, 2024 and sell it today you would earn a total of 1,129 from holding National Australia Bank or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Havilah Resources
Performance |
| Timeline |
| National Australia Bank |
| Havilah Resources |
National Australia and Havilah Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Havilah Resources
The main advantage of trading using opposite National Australia and Havilah Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Havilah Resources 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 Havilah Resources will offset losses from the drop in Havilah Resources' long position.| National Australia vs. Westpac Banking | National Australia vs. Commonwealth Bank | National Australia vs. Commonwealth Bank of | National Australia vs. Commonwealth Bank of |
| Havilah Resources vs. Magellan Financial Group | Havilah Resources vs. National Australia Bank | Havilah Resources vs. Kkr Credit Income | Havilah Resources vs. Queste Communications |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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