Correlation Between National Australia and Regal Funds
Can any of the company-specific risk be diversified away by investing in both National Australia and Regal Funds 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 Regal Funds 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 Regal Funds Management, you can compare the effects of market volatilities on National Australia and Regal Funds 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 Regal Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Regal Funds.
Diversification Opportunities for National Australia and Regal Funds
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Regal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Regal Funds Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Funds 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 Regal Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Funds Management has no effect on the direction of National Australia i.e., National Australia and Regal Funds go up and down completely randomly.
Pair Corralation between National Australia and Regal Funds
Assuming the 90 days trading horizon National Australia is expected to generate 3.21 times less return on investment than Regal Funds. But when comparing it to its historical volatility, National Australia Bank is 6.13 times less risky than Regal Funds. It trades about 0.06 of its potential returns per unit of risk. Regal Funds Management is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 323.00 in Regal Funds Management on August 25, 2024 and sell it today you would earn a total of 95.00 from holding Regal Funds Management or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Regal Funds Management
Performance |
| Timeline |
| National Australia Bank |
| Regal Funds Management |
National Australia and Regal Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Regal Funds
The main advantage of trading using opposite National Australia and Regal Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Regal Funds 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 Regal Funds will offset losses from the drop in Regal Funds' long position.| National Australia vs. Origin Energy | National Australia vs. Insurance Australia Group | National Australia vs. Hotel Property Investments | National Australia vs. Ecofibre |
| Regal Funds vs. National Australia Bank | Regal Funds vs. National Australia Bank | Regal Funds vs. Westpac Banking | Regal Funds 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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