Correlation Between Sky Metals and National Australia
Can any of the company-specific risk be diversified away by investing in both Sky Metals 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 Sky Metals and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and National Australia Bank, you can compare the effects of market volatilities on Sky Metals 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 Sky Metals with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and National Australia.
Diversification Opportunities for Sky Metals and National Australia
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sky and National is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals 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 Sky Metals 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 Sky Metals 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 Sky Metals i.e., Sky Metals and National Australia go up and down completely randomly.
Pair Corralation between Sky Metals and National Australia
Assuming the 90 days trading horizon Sky Metals is expected to under-perform the National Australia. In addition to that, Sky Metals is 7.6 times more volatile than National Australia Bank. It trades about -0.13 of its total potential returns per unit of risk. National Australia Bank is currently generating about 0.01 per unit of volatility. If you would invest 10,388 in National Australia Bank on October 13, 2024 and sell it today you would earn a total of 7.00 from holding National Australia Bank or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sky Metals vs. National Australia Bank
Performance |
| Timeline |
| Sky Metals |
| National Australia Bank |
Sky Metals and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and National Australia
The main advantage of trading using opposite Sky Metals and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals 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.| Sky Metals vs. AiMedia Technologies | Sky Metals vs. ARN Media Limited | Sky Metals vs. K2 Asset Management | Sky Metals vs. Retail Food Group |
| National Australia vs. Super Retail Group | National Australia vs. Centrex Metals | National Australia vs. Sky Metals | National Australia vs. ACDC Metals |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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