Correlation Between Svenska Handelsbanken and National Australia
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken 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 Svenska Handelsbanken and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Handelsbanken PK and National Australia Bank, you can compare the effects of market volatilities on Svenska Handelsbanken 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 Svenska Handelsbanken with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and National Australia.
Diversification Opportunities for Svenska Handelsbanken and National Australia
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Svenska and National is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken PK 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 Svenska Handelsbanken 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 Svenska Handelsbanken PK 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 Svenska Handelsbanken i.e., Svenska Handelsbanken and National Australia go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and National Australia
Assuming the 90 days horizon Svenska Handelsbanken is expected to generate 1.85 times less return on investment than National Australia. But when comparing it to its historical volatility, Svenska Handelsbanken PK is 1.36 times less risky than National Australia. It trades about 0.21 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,302 in National Australia Bank on November 5, 2024 and sell it today you would earn a total of 198.00 from holding National Australia Bank or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken PK vs. National Australia Bank
Performance |
| Timeline |
| Svenska Handelsbanken |
| National Australia Bank |
Svenska Handelsbanken and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and National Australia
The main advantage of trading using opposite Svenska Handelsbanken and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken 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.| Svenska Handelsbanken vs. China Construction Bank | Svenska Handelsbanken vs. Industrial and Commercial | Svenska Handelsbanken vs. Bank of America | Svenska Handelsbanken vs. Bank of America |
| National Australia vs. National Australia Bank | National Australia vs. China Construction Bank | National Australia vs. Bank of America | National Australia vs. ANZ Group Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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