Correlation Between National Australia and Meeka Metals
Can any of the company-specific risk be diversified away by investing in both National Australia and Meeka Metals 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 Meeka Metals 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 Meeka Metals Limited, you can compare the effects of market volatilities on National Australia and Meeka Metals 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 Meeka Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Meeka Metals.
Diversification Opportunities for National Australia and Meeka Metals
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Meeka is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Meeka Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meeka Metals Limited 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 Meeka Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meeka Metals Limited has no effect on the direction of National Australia i.e., National Australia and Meeka Metals go up and down completely randomly.
Pair Corralation between National Australia and Meeka Metals
Assuming the 90 days trading horizon National Australia is expected to generate 21.08 times less return on investment than Meeka Metals. But when comparing it to its historical volatility, National Australia Bank is 18.36 times less risky than Meeka Metals. It trades about 0.09 of its potential returns per unit of risk. Meeka Metals Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Meeka Metals Limited on November 9, 2024 and sell it today you would earn a total of 7.00 from holding Meeka Metals Limited or generate 175.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Meeka Metals Limited
Performance |
| Timeline |
| National Australia Bank |
| Meeka Metals Limited |
National Australia and Meeka Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Meeka Metals
The main advantage of trading using opposite National Australia and Meeka Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Meeka Metals 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 Meeka Metals will offset losses from the drop in Meeka Metals' long position.| National Australia vs. Bluescope Steel | National Australia vs. Vulcan Steel | National Australia vs. Dexus Convenience Retail | National Australia vs. Vitura Health Limited |
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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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