Correlation Between Truscott Mining and National Australia
Can any of the company-specific risk be diversified away by investing in both Truscott Mining 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 Truscott Mining and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truscott Mining Corp and National Australia Bank, you can compare the effects of market volatilities on Truscott Mining 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 Truscott Mining with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truscott Mining and National Australia.
Diversification Opportunities for Truscott Mining and National Australia
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Truscott and National is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Truscott Mining Corp 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 Truscott Mining 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 Truscott Mining Corp 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 Truscott Mining i.e., Truscott Mining and National Australia go up and down completely randomly.
Pair Corralation between Truscott Mining and National Australia
Assuming the 90 days trading horizon Truscott Mining Corp is expected to generate 14.67 times more return on investment than National Australia. However, Truscott Mining is 14.67 times more volatile than National Australia Bank. It trades about 0.03 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.07 per unit of risk. If you would invest 7.70 in Truscott Mining Corp on October 21, 2024 and sell it today you would earn a total of 0.20 from holding Truscott Mining Corp or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truscott Mining Corp vs. National Australia Bank
Performance |
| Timeline |
| Truscott Mining Corp |
| National Australia Bank |
Truscott Mining and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truscott Mining and National Australia
The main advantage of trading using opposite Truscott Mining and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truscott Mining 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.| Truscott Mining vs. MetalsGrove Mining | Truscott Mining vs. Step One Clothing | Truscott Mining vs. Evolution Mining | Truscott Mining vs. Collins Foods |
| National Australia vs. Torque Metals | National Australia vs. Sky Metals | National Australia vs. Kneomedia | National Australia vs. oOhMedia |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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