Correlation Between Skycity Entertainment and National Australia
Can any of the company-specific risk be diversified away by investing in both Skycity Entertainment 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 Skycity Entertainment and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skycity Entertainment Group and National Australia Bank, you can compare the effects of market volatilities on Skycity Entertainment 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 Skycity Entertainment with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skycity Entertainment and National Australia.
Diversification Opportunities for Skycity Entertainment and National Australia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Skycity and National is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Skycity Entertainment Group 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 Skycity Entertainment 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 Skycity Entertainment Group 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 Skycity Entertainment i.e., Skycity Entertainment and National Australia go up and down completely randomly.
Pair Corralation between Skycity Entertainment and National Australia
Assuming the 90 days trading horizon Skycity Entertainment Group is expected to generate 7.06 times more return on investment than National Australia. However, Skycity Entertainment is 7.06 times more volatile than National Australia Bank. It trades about 0.06 of its potential returns per unit of risk. National Australia Bank is currently generating about -0.04 per unit of risk. If you would invest 125.00 in Skycity Entertainment Group on September 14, 2024 and sell it today you would earn a total of 3.00 from holding Skycity Entertainment Group or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skycity Entertainment Group vs. National Australia Bank
Performance |
| Timeline |
| Skycity Entertainment |
| National Australia Bank |
Skycity Entertainment and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skycity Entertainment and National Australia
The main advantage of trading using opposite Skycity Entertainment and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skycity Entertainment 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.| Skycity Entertainment vs. Energy Resources | Skycity Entertainment vs. 88 Energy | Skycity Entertainment vs. Amani Gold | Skycity Entertainment vs. A1 Investments Resources |
| National Australia vs. Readytech Holdings | National Australia vs. Zoom2u Technologies | National Australia vs. Thorney Technologies | National Australia vs. Bio Gene Technology |
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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