Correlation Between Epsilon Healthcare and National Australia

Can any of the company-specific risk be diversified away by investing in both Epsilon Healthcare 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 Epsilon Healthcare and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Epsilon Healthcare and National Australia Bank, you can compare the effects of market volatilities on Epsilon Healthcare 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 Epsilon Healthcare with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Healthcare and National Australia.

Diversification Opportunities for Epsilon Healthcare and National Australia

0.0

Correlation Coefficient

Epsilon Healthcare  National Australia

Pay attention - limited upside

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

Pair Corralation between Epsilon Healthcare and National Australia

If you would invest  10,286  in National Australia Bank on September 16, 2024 and sell it today you would earn a total of  74.00  from holding National Australia Bank or generate 0.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Epsilon Healthcare  vs.  National Australia Bank

Epsilon Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Epsilon Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Epsilon Healthcare 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

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Australia Bank are ranked lower than 3 (%) 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.

Pair Trading with Epsilon Healthcare and National Australia

The main advantage of trading using opposite Epsilon Healthcare and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Healthcare 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 Epsilon Healthcare 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.