Correlation Between National Australia and PM Capital
Can any of the company-specific risk be diversified away by investing in both National Australia and PM Capital 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 PM Capital 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 PM Capital Global, you can compare the effects of market volatilities on National Australia and PM Capital 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 PM Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and PM Capital.
Diversification Opportunities for National Australia and PM Capital
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and PGF is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and PM Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PM Capital Global 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 PM Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PM Capital Global has no effect on the direction of National Australia i.e., National Australia and PM Capital go up and down completely randomly.
Pair Corralation between National Australia and PM Capital
Assuming the 90 days trading horizon National Australia is expected to generate 1.2 times less return on investment than PM Capital. But when comparing it to its historical volatility, National Australia Bank is 4.56 times less risky than PM Capital. It trades about 0.05 of its potential returns per unit of risk. PM Capital Global is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 224.00 in PM Capital Global on August 25, 2024 and sell it today you would earn a total of 1.00 from holding PM Capital Global or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. PM Capital Global
Performance |
| Timeline |
| National Australia Bank |
| PM Capital Global |
National Australia and PM Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and PM Capital
The main advantage of trading using opposite National Australia and PM Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, PM Capital 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 PM Capital will offset losses from the drop in PM Capital'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 |
| PM Capital vs. National Australia Bank | PM Capital vs. National Australia Bank | PM Capital vs. Westpac Banking | PM Capital vs. National Australia Bank |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |