Correlation Between Strickland Metals and National Australia
Can any of the company-specific risk be diversified away by investing in both Strickland 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 Strickland 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 Strickland Metals and National Australia Bank, you can compare the effects of market volatilities on Strickland 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 Strickland Metals with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strickland Metals and National Australia.
Diversification Opportunities for Strickland Metals and National Australia
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Strickland and National is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Strickland 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 Strickland 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 Strickland 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 Strickland Metals i.e., Strickland Metals and National Australia go up and down completely randomly.
Pair Corralation between Strickland Metals and National Australia
Assuming the 90 days trading horizon Strickland Metals is expected to generate 4.13 times more return on investment than National Australia. However, Strickland Metals is 4.13 times more volatile than National Australia Bank. It trades about 0.09 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.0 per unit of risk. If you would invest 7.50 in Strickland Metals on September 2, 2024 and sell it today you would earn a total of 0.50 from holding Strickland Metals or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strickland Metals vs. National Australia Bank
Performance |
| Timeline |
| Strickland Metals |
| National Australia Bank |
Strickland Metals and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strickland Metals and National Australia
The main advantage of trading using opposite Strickland Metals and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strickland 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.| Strickland Metals vs. Northern Star Resources | Strickland Metals vs. Evolution Mining | Strickland Metals vs. Bluescope Steel | Strickland Metals vs. Sandfire Resources NL |
| National Australia vs. Dexus Convenience Retail | National Australia vs. Richmond Vanadium Technology | National Australia vs. Thorney Technologies | National Australia vs. WiseTech Global 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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