Correlation Between National Australia and Autosports
Can any of the company-specific risk be diversified away by investing in both National Australia and Autosports 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 Autosports 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 Autosports Group, you can compare the effects of market volatilities on National Australia and Autosports 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 Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Autosports.
Diversification Opportunities for National Australia and Autosports
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Autosports is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group 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 Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of National Australia i.e., National Australia and Autosports go up and down completely randomly.
Pair Corralation between National Australia and Autosports
Assuming the 90 days trading horizon National Australia is expected to generate 1.37 times less return on investment than Autosports. But when comparing it to its historical volatility, National Australia Bank is 4.79 times less risky than Autosports. It trades about 0.06 of its potential returns per unit of risk. Autosports Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 174.00 in Autosports Group on September 14, 2024 and sell it today you would earn a total of 11.00 from holding Autosports Group or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Autosports Group
Performance |
| Timeline |
| National Australia Bank |
| Autosports Group |
National Australia and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Autosports
The main advantage of trading using opposite National Australia and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| National Australia vs. Stelar Metals | National Australia vs. Air New Zealand | National Australia vs. Global Data Centre | National Australia vs. Actinogen Medical |
| Autosports vs. Westpac Banking | Autosports vs. National Australia Bank | Autosports vs. National Australia Bank | Autosports 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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