Correlation Between National Australia and Indiana Resources
Can any of the company-specific risk be diversified away by investing in both National Australia and Indiana 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 Indiana 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 Indiana Resources, you can compare the effects of market volatilities on National Australia and Indiana 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 Indiana Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Indiana Resources.
Diversification Opportunities for National Australia and Indiana Resources
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Indiana is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Indiana Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indiana 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 Indiana Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indiana Resources has no effect on the direction of National Australia i.e., National Australia and Indiana Resources go up and down completely randomly.
Pair Corralation between National Australia and Indiana Resources
Assuming the 90 days trading horizon National Australia is expected to generate 12.82 times less return on investment than Indiana Resources. But when comparing it to its historical volatility, National Australia Bank is 17.54 times less risky than Indiana Resources. It trades about 0.07 of its potential returns per unit of risk. Indiana Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.03 in Indiana Resources on September 14, 2024 and sell it today you would earn a total of 3.07 from holding Indiana Resources or generate 101.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
National Australia Bank vs. Indiana Resources
Performance |
| Timeline |
| National Australia Bank |
| Indiana Resources |
National Australia and Indiana Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Indiana Resources
The main advantage of trading using opposite National Australia and Indiana Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Indiana 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 Indiana Resources will offset losses from the drop in Indiana Resources' long position.| National Australia vs. Readytech Holdings | National Australia vs. Zoom2u Technologies | National Australia vs. Thorney Technologies | National Australia vs. Bio Gene Technology |
| Indiana Resources vs. National Australia Bank | Indiana Resources vs. Bank of Queensland | Indiana Resources vs. Prime Financial Group | Indiana Resources vs. Finexia Financial Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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