Correlation Between National Australia and Strickland Metals
Can any of the company-specific risk be diversified away by investing in both National Australia and Strickland 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 Strickland 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 Strickland Metals, you can compare the effects of market volatilities on National Australia and Strickland 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 Strickland Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Strickland Metals.
Diversification Opportunities for National Australia and Strickland Metals
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Strickland is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Strickland Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strickland Metals 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 Strickland Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strickland Metals has no effect on the direction of National Australia i.e., National Australia and Strickland Metals go up and down completely randomly.
Pair Corralation between National Australia and Strickland Metals
Assuming the 90 days trading horizon National Australia Bank is expected to under-perform the Strickland Metals. But the preferred stock apears to be less risky and, when comparing its historical volatility, National Australia Bank is 13.38 times less risky than Strickland Metals. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Strickland Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Strickland Metals on September 13, 2024 and sell it today you would earn a total of 0.90 from holding Strickland Metals or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Strickland Metals
Performance |
| Timeline |
| National Australia Bank |
| Strickland Metals |
National Australia and Strickland Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Strickland Metals
The main advantage of trading using opposite National Australia and Strickland Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Strickland 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 Strickland Metals will offset losses from the drop in Strickland Metals' long position.| National Australia vs. Iron Road | National Australia vs. Skycity Entertainment Group | National Australia vs. Srj Technologies Group | National Australia vs. My Foodie Box |
| Strickland Metals vs. Health and Plant | Strickland Metals vs. Epsilon Healthcare | Strickland Metals vs. Commonwealth Bank of | Strickland Metals vs. Global Health |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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