Correlation Between National Australia and MA Financial
Can any of the company-specific risk be diversified away by investing in both National Australia and MA Financial 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 MA Financial 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 MA Financial Group, you can compare the effects of market volatilities on National Australia and MA Financial 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 MA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and MA Financial.
Diversification Opportunities for National Australia and MA Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and MAF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and MA Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MA Financial 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 MA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MA Financial Group has no effect on the direction of National Australia i.e., National Australia and MA Financial go up and down completely randomly.
Pair Corralation between National Australia and MA Financial
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.1 times more return on investment than MA Financial. However, National Australia Bank is 9.68 times less risky than MA Financial. It trades about -0.1 of its potential returns per unit of risk. MA Financial Group is currently generating about -0.02 per unit of risk. If you would invest 10,561 in National Australia Bank on August 28, 2024 and sell it today you would lose (46.00) from holding National Australia Bank or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. MA Financial Group
Performance |
| Timeline |
| National Australia Bank |
| MA Financial Group |
National Australia and MA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and MA Financial
The main advantage of trading using opposite National Australia and MA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, MA Financial 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 MA Financial will offset losses from the drop in MA Financial's long position.| National Australia vs. Westpac Banking | National Australia vs. Commonwealth Bank | National Australia vs. National Australia Bank | National Australia vs. Westpac Banking Corp |
| MA Financial vs. Renascor Resources | MA Financial vs. Venus Metals | MA Financial vs. Havilah Resources | MA Financial vs. Asara Resources |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |