Correlation Between National Australia and Microequities Asset
Can any of the company-specific risk be diversified away by investing in both National Australia and Microequities 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 Microequities 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 Microequities Asset Management, you can compare the effects of market volatilities on National Australia and Microequities 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 Microequities Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Microequities Asset.
Diversification Opportunities for National Australia and Microequities Asset
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Microequities is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Microequities Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microequities Asset 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 Microequities Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microequities Asset has no effect on the direction of National Australia i.e., National Australia and Microequities Asset go up and down completely randomly.
Pair Corralation between National Australia and Microequities Asset
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.1 times more return on investment than Microequities Asset. However, National Australia Bank is 9.84 times less risky than Microequities Asset. It trades about 0.08 of its potential returns per unit of risk. Microequities Asset Management is currently generating about 0.0 per unit of risk. If you would invest 9,438 in National Australia Bank on August 25, 2024 and sell it today you would earn a total of 1,082 from holding National Australia Bank or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
National Australia Bank vs. Microequities Asset Management
Performance |
| Timeline |
| National Australia Bank |
| Microequities Asset |
National Australia and Microequities Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Microequities Asset
The main advantage of trading using opposite National Australia and Microequities Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Microequities 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 Microequities Asset will offset losses from the drop in Microequities Asset's long position.| National Australia vs. Westpac Banking | National Australia vs. Commonwealth Bank | National Australia vs. Commonwealth Bank of | National Australia vs. Commonwealth Bank of |
| Microequities Asset vs. Macquarie Bank Limited | Microequities Asset vs. Catalyst Metals | Microequities Asset vs. DY6 Metals | Microequities Asset vs. Sky Metals |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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