Correlation Between National Australia and Dow Jones
Can any of the company-specific risk be diversified away by investing in both National Australia and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on National Australia and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Dow Jones.
Diversification Opportunities for National Australia and Dow Jones
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Dow is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of National Australia i.e., National Australia and Dow Jones go up and down completely randomly.
Pair Corralation between National Australia and Dow Jones
Assuming the 90 days horizon National Australia Bank is expected to generate 1.84 times more return on investment than Dow Jones. However, National Australia is 1.84 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 1,028 in National Australia Bank on August 28, 2024 and sell it today you would earn a total of 268.00 from holding National Australia Bank or generate 26.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Dow Jones Industrial
Performance |
| Timeline |
National Australia and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
National Australia Bank
Pair trading matchups for National Australia
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with National Australia and Dow Jones
The main advantage of trading using opposite National Australia and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| National Australia vs. China Construction Bank | National Australia vs. Bank of America | National Australia vs. ANZ Group Holdings | National Australia vs. Bank of America |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |