Correlation Between Tombador Iron and National Australia

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Can any of the company-specific risk be diversified away by investing in both Tombador Iron 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 Tombador Iron and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tombador Iron and National Australia Bank, you can compare the effects of market volatilities on Tombador Iron 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 Tombador Iron with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tombador Iron and National Australia.

Diversification Opportunities for Tombador Iron and National Australia

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Tombador and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tombador Iron 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 Tombador Iron 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 Tombador Iron 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 Tombador Iron i.e., Tombador Iron and National Australia go up and down completely randomly.

Pair Corralation between Tombador Iron and National Australia

Assuming the 90 days trading horizon Tombador Iron is expected to generate 175.29 times more return on investment than National Australia. However, Tombador Iron is 175.29 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 0.05 per unit of risk. If you would invest  1.40  in Tombador Iron on November 7, 2024 and sell it today you would earn a total of  33.60  from holding Tombador Iron or generate 2400.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tombador Iron  vs.  National Australia Bank

 Performance 
       Timeline  
Tombador Iron 

Risk-Adjusted Performance

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Over the last 90 days Tombador Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tombador Iron is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
National Australia Bank 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in National Australia Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, National Australia is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Tombador Iron and National Australia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tombador Iron and National Australia

The main advantage of trading using opposite Tombador Iron and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tombador Iron 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.
The idea behind Tombador Iron and National Australia Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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