Correlation Between National Australia and Platinum Asset
Can any of the company-specific risk be diversified away by investing in both National Australia and Platinum Asset 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 Platinum Asset 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 Platinum Asset Management, you can compare the effects of market volatilities on National Australia and Platinum Asset 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 Platinum Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Platinum Asset.
Diversification Opportunities for National Australia and Platinum Asset
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Platinum is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Platinum Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asset Management 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 Platinum Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asset Management has no effect on the direction of National Australia i.e., National Australia and Platinum Asset go up and down completely randomly.
Pair Corralation between National Australia and Platinum Asset
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.68 times more return on investment than Platinum Asset. However, National Australia Bank is 1.47 times less risky than Platinum Asset. It trades about 0.0 of its potential returns per unit of risk. Platinum Asset Management is currently generating about -0.44 per unit of risk. If you would invest 10,600 in National Australia Bank on August 29, 2024 and sell it today you would lose (8.00) from holding National Australia Bank or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Platinum Asset Management
Performance |
| Timeline |
| National Australia Bank |
| Platinum Asset Management |
National Australia and Platinum Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Platinum Asset
The main advantage of trading using opposite National Australia and Platinum Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Platinum Asset 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 Platinum Asset will offset losses from the drop in Platinum Asset's long position.| National Australia vs. EVE Health Group | National Australia vs. Austco Healthcare | National Australia vs. Aurelia Metals | National Australia vs. Dicker Data |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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