Correlation Between Wt Financial and National Australia
Can any of the company-specific risk be diversified away by investing in both Wt Financial 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 Wt Financial and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wt Financial Group and National Australia Bank, you can compare the effects of market volatilities on Wt Financial 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 Wt Financial with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wt Financial and National Australia.
Diversification Opportunities for Wt Financial and National Australia
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WTL and National is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Wt Financial Group 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 Wt Financial 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 Wt Financial Group 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 Wt Financial i.e., Wt Financial and National Australia go up and down completely randomly.
Pair Corralation between Wt Financial and National Australia
Assuming the 90 days trading horizon Wt Financial Group is expected to under-perform the National Australia. In addition to that, Wt Financial is 10.97 times more volatile than National Australia Bank. It trades about -0.14 of its total potential returns per unit of risk. National Australia Bank is currently generating about 0.17 per unit of volatility. If you would invest 10,525 in National Australia Bank on August 30, 2024 and sell it today you would earn a total of 100.00 from holding National Australia Bank or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wt Financial Group vs. National Australia Bank
Performance |
| Timeline |
| Wt Financial Group |
| National Australia Bank |
Wt Financial and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wt Financial and National Australia
The main advantage of trading using opposite Wt Financial and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wt Financial 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.| Wt Financial vs. Dicker Data | Wt Financial vs. Bio Gene Technology | Wt Financial vs. Ainsworth Game Technology | Wt Financial vs. TPG Telecom |
| National Australia vs. Westpac Banking | National Australia vs. Commonwealth Bank of | National Australia vs. Commonwealth Bank of |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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