Correlation Between National Australia and K2 Asset
Can any of the company-specific risk be diversified away by investing in both National Australia and K2 Asset 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 K2 Asset 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 K2 Asset Management, you can compare the effects of market volatilities on National Australia and K2 Asset 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 K2 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and K2 Asset.
Diversification Opportunities for National Australia and K2 Asset
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and KAM is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and K2 Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Asset Management 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 K2 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Asset Management has no effect on the direction of National Australia i.e., National Australia and K2 Asset go up and down completely randomly.
Pair Corralation between National Australia and K2 Asset
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.18 times more return on investment than K2 Asset. However, National Australia Bank is 5.7 times less risky than K2 Asset. It trades about 0.06 of its potential returns per unit of risk. K2 Asset Management is currently generating about -0.23 per unit of risk. If you would invest 10,451 in National Australia Bank on October 21, 2024 and sell it today you would earn a total of 25.00 from holding National Australia Bank or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. K2 Asset Management
Performance |
| Timeline |
| National Australia Bank |
| K2 Asset Management |
National Australia and K2 Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and K2 Asset
The main advantage of trading using opposite National Australia and K2 Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, K2 Asset 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 K2 Asset will offset losses from the drop in K2 Asset's long position.| National Australia vs. TPG Telecom | National Australia vs. M3 Mining | National Australia vs. Truscott Mining Corp | National Australia vs. Balkan Mining and |
| K2 Asset vs. ABACUS STORAGE KING | K2 Asset vs. AiMedia Technologies | K2 Asset vs. Sky Metals | K2 Asset vs. Southern Cross Media |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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