Correlation Between National Australia and Impedimed
Can any of the company-specific risk be diversified away by investing in both National Australia and Impedimed 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 Impedimed 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 Impedimed, you can compare the effects of market volatilities on National Australia and Impedimed 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 Impedimed. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Impedimed.
Diversification Opportunities for National Australia and Impedimed
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Impedimed is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Impedimed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impedimed 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 Impedimed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impedimed has no effect on the direction of National Australia i.e., National Australia and Impedimed go up and down completely randomly.
Pair Corralation between National Australia and Impedimed
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.14 times more return on investment than Impedimed. However, National Australia Bank is 7.3 times less risky than Impedimed. It trades about 0.07 of its potential returns per unit of risk. Impedimed is currently generating about -0.06 per unit of risk. If you would invest 10,139 in National Australia Bank on August 29, 2024 and sell it today you would earn a total of 461.00 from holding National Australia Bank or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Impedimed
Performance |
| Timeline |
| National Australia Bank |
| Impedimed |
National Australia and Impedimed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Impedimed
The main advantage of trading using opposite National Australia and Impedimed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Impedimed 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 Impedimed will offset losses from the drop in Impedimed's long position.| National Australia vs. EVE Health Group | National Australia vs. Austco Healthcare | National Australia vs. Aurelia Metals | National Australia vs. Dicker Data |
| Impedimed vs. Westpac Banking | Impedimed vs. Champion Iron | Impedimed vs. Ridley | Impedimed vs. Peel Mining |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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