Correlation Between NatWest Group and Axis Bank
Can any of the company-specific risk be diversified away by investing in both NatWest Group and Axis Bank 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 NatWest Group and Axis Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NatWest Group PLC and Axis Bank Ltd, you can compare the effects of market volatilities on NatWest Group and Axis Bank 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 NatWest Group with a short position of Axis Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NatWest Group and Axis Bank.
Diversification Opportunities for NatWest Group and Axis Bank
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NatWest and Axis is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding NatWest Group PLC and Axis Bank Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axis Bank and NatWest Group 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 NatWest Group PLC are associated (or correlated) with Axis Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axis Bank has no effect on the direction of NatWest Group i.e., NatWest Group and Axis Bank go up and down completely randomly.
Pair Corralation between NatWest Group and Axis Bank
Assuming the 90 days trading horizon NatWest Group PLC is expected to generate 1.08 times more return on investment than Axis Bank. However, NatWest Group is 1.08 times more volatile than Axis Bank Ltd. It trades about 0.17 of its potential returns per unit of risk. Axis Bank Ltd is currently generating about 0.0 per unit of risk. If you would invest 18,980 in NatWest Group PLC on November 28, 2024 and sell it today you would earn a total of 26,350 from holding NatWest Group PLC or generate 138.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NatWest Group PLC vs. Axis Bank Ltd
Performance |
| Timeline |
| NatWest Group PLC |
| Axis Bank |
NatWest Group and Axis Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NatWest Group and Axis Bank
The main advantage of trading using opposite NatWest Group and Axis Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NatWest Group position performs unexpectedly, Axis Bank 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 Axis Bank will offset losses from the drop in Axis Bank's long position.| NatWest Group vs. Air Products Chemicals | NatWest Group vs. SBM Offshore NV | NatWest Group vs. Systemair AB | NatWest Group vs. Solstad Offshore ASA |
| Axis Bank vs. State Bank of | Axis Bank vs. Reliance Industries Limited | Axis Bank vs. Larsen Toubro Limited | Axis Bank vs. Tata Steel Limited |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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