Correlation Between National Australia and Step One
Can any of the company-specific risk be diversified away by investing in both National Australia and Step One 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 Step One 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 Step One Clothing, you can compare the effects of market volatilities on National Australia and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Step One.
Diversification Opportunities for National Australia and Step One
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Step is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of National Australia i.e., National Australia and Step One go up and down completely randomly.
Pair Corralation between National Australia and Step One
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.1 times more return on investment than Step One. However, National Australia Bank is 10.27 times less risky than Step One. It trades about -0.03 of its potential returns per unit of risk. Step One Clothing is currently generating about -0.06 per unit of risk. If you would invest 10,449 in National Australia Bank on September 15, 2024 and sell it today you would lose (22.00) from holding National Australia Bank or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Step One Clothing
Performance |
| Timeline |
| National Australia Bank |
| Step One Clothing |
National Australia and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Step One
The main advantage of trading using opposite National Australia and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| National Australia vs. Black Rock Mining | National Australia vs. Cleanaway Waste Management | National Australia vs. Emetals | National Australia vs. Green Technology Metals |
| Step One vs. Wt Financial Group | Step One vs. Insignia Financial | Step One vs. EP Financial Group | Step One 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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