Correlation Between National Australia and MA Financial
Can any of the company-specific risk be diversified away by investing in both National Australia and MA Financial 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 MA Financial 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 MA Financial Group, you can compare the effects of market volatilities on National Australia and MA Financial 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 MA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and MA Financial.
Diversification Opportunities for National Australia and MA Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and MAF is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and MA Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MA Financial 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 MA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MA Financial Group has no effect on the direction of National Australia i.e., National Australia and MA Financial go up and down completely randomly.
Pair Corralation between National Australia and MA Financial
Assuming the 90 days trading horizon National Australia is expected to generate 40.96 times less return on investment than MA Financial. But when comparing it to its historical volatility, National Australia Bank is 13.9 times less risky than MA Financial. It trades about 0.16 of its potential returns per unit of risk. MA Financial Group is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 640.00 in MA Financial Group on December 4, 2024 and sell it today you would earn a total of 181.00 from holding MA Financial Group or generate 28.28% 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. MA Financial Group
Performance |
| Timeline |
| National Australia Bank |
| MA Financial Group |
National Australia and MA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and MA Financial
The main advantage of trading using opposite National Australia and MA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, MA Financial 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 MA Financial will offset losses from the drop in MA Financial's long position.| National Australia vs. Retail Food Group | National Australia vs. Zoom2u Technologies | National Australia vs. Beston Global Food | National Australia vs. Collins Foods |
| MA Financial vs. Cleanaway Waste Management | MA Financial vs. Collins Foods | MA Financial vs. Ras Technology Holdings | MA Financial vs. K2 Asset Management |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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