Correlation Between National Australia and Ora Banda
Can any of the company-specific risk be diversified away by investing in both National Australia and Ora Banda 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 Ora Banda 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 Ora Banda Mining, you can compare the effects of market volatilities on National Australia and Ora Banda 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 Ora Banda. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Ora Banda.
Diversification Opportunities for National Australia and Ora Banda
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Ora is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Ora Banda Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ora Banda Mining 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 Ora Banda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ora Banda Mining has no effect on the direction of National Australia i.e., National Australia and Ora Banda go up and down completely randomly.
Pair Corralation between National Australia and Ora Banda
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.05 times more return on investment than Ora Banda. However, National Australia Bank is 20.26 times less risky than Ora Banda. It trades about 0.06 of its potential returns per unit of risk. Ora Banda Mining is currently generating about -0.24 per unit of risk. If you would invest 10,567 in National Australia Bank on September 4, 2024 and sell it today you would earn a total of 33.00 from holding National Australia Bank or generate 0.31% 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. Ora Banda Mining
Performance |
| Timeline |
| National Australia Bank |
| Ora Banda Mining |
National Australia and Ora Banda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Ora Banda
The main advantage of trading using opposite National Australia and Ora Banda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Ora Banda 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 Ora Banda will offset losses from the drop in Ora Banda's long position.| National Australia vs. Westpac Banking | National Australia vs. Commonwealth Bank | National Australia vs. Commonwealth Bank of | National Australia vs. Australia and New |
| Ora Banda vs. Northern Star Resources | Ora Banda vs. Evolution Mining | Ora Banda vs. Sandfire Resources NL | Ora Banda vs. Aneka Tambang Tbk |
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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