Correlation Between Stelar Metals and National Australia
Can any of the company-specific risk be diversified away by investing in both Stelar 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 Stelar 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 Stelar Metals and National Australia Bank, you can compare the effects of market volatilities on Stelar 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 Stelar Metals with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and National Australia.
Diversification Opportunities for Stelar Metals and National Australia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stelar and National is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stelar 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 Stelar 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 Stelar 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 Stelar Metals i.e., Stelar Metals and National Australia go up and down completely randomly.
Pair Corralation between Stelar Metals and National Australia
Assuming the 90 days trading horizon Stelar Metals is expected to under-perform the National Australia. In addition to that, Stelar Metals is 13.03 times more volatile than National Australia Bank. It trades about -0.09 of its total potential returns per unit of risk. National Australia Bank is currently generating about 0.08 per unit of volatility. If you would invest 9,595 in National Australia Bank on September 14, 2024 and sell it today you would earn a total of 815.00 from holding National Australia Bank or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Stelar Metals vs. National Australia Bank
Performance |
| Timeline |
| Stelar Metals |
| National Australia Bank |
Stelar Metals and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and National Australia
The main advantage of trading using opposite Stelar Metals and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar 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.| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. Sandfire Resources NL |
| National Australia vs. Stelar Metals | National Australia vs. Air New Zealand | National Australia vs. Global Data Centre | National Australia vs. Actinogen Medical |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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