Correlation Between Regal Funds and National Australia
Can any of the company-specific risk be diversified away by investing in both Regal Funds and National Australia 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 Regal Funds and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Funds Management and National Australia Bank, you can compare the effects of market volatilities on Regal Funds and National Australia 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 Regal Funds with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Funds and National Australia.
Diversification Opportunities for Regal Funds and National Australia
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Regal and National is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Regal Funds Management and National Australia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Australia Bank and Regal Funds 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 Regal Funds Management are associated (or correlated) with National Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Australia Bank has no effect on the direction of Regal Funds i.e., Regal Funds and National Australia go up and down completely randomly.
Pair Corralation between Regal Funds and National Australia
Assuming the 90 days trading horizon Regal Funds Management is expected to generate 2.02 times more return on investment than National Australia. However, Regal Funds is 2.02 times more volatile than National Australia Bank. It trades about 0.28 of its potential returns per unit of risk. National Australia Bank is currently generating about -0.05 per unit of risk. If you would invest 368.00 in Regal Funds Management on August 26, 2024 and sell it today you would earn a total of 50.00 from holding Regal Funds Management or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Funds Management vs. National Australia Bank
Performance |
| Timeline |
| Regal Funds Management |
| National Australia Bank |
Regal Funds and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Funds and National Australia
The main advantage of trading using opposite Regal Funds and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Funds position performs unexpectedly, National Australia 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 National Australia will offset losses from the drop in National Australia's long position.| Regal Funds vs. National Australia Bank | Regal Funds vs. National Australia Bank | Regal Funds vs. Westpac Banking | Regal Funds vs. National Australia Bank |
| National Australia vs. Origin Energy | National Australia vs. Insurance Australia Group | National Australia vs. Hotel Property Investments | National Australia vs. Ecofibre |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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