Correlation Between National Australia and Pact Group
Can any of the company-specific risk be diversified away by investing in both National Australia and Pact Group 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 National Australia and Pact Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Australia Bank and Pact Group Holdings, you can compare the effects of market volatilities on National Australia and Pact Group 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 National Australia with a short position of Pact Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Pact Group.
Diversification Opportunities for National Australia and Pact Group
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Pact is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Pact Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pact Group Holdings and National Australia 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 National Australia Bank are associated (or correlated) with Pact Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pact Group Holdings has no effect on the direction of National Australia i.e., National Australia and Pact Group go up and down completely randomly.
Pair Corralation between National Australia and Pact Group
Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.71 times more return on investment than Pact Group. However, National Australia Bank is 1.4 times less risky than Pact Group. It trades about 0.01 of its potential returns per unit of risk. Pact Group Holdings is currently generating about 0.0 per unit of risk. If you would invest 3,746 in National Australia Bank on September 13, 2024 and sell it today you would earn a total of 13.00 from holding National Australia Bank or generate 0.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
National Australia Bank vs. Pact Group Holdings
Performance |
Timeline |
National Australia Bank |
Pact Group Holdings |
National Australia and Pact Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Australia and Pact Group
The main advantage of trading using opposite National Australia and Pact Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Pact Group 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 Pact Group will offset losses from the drop in Pact Group's long position.National Australia vs. Charter Hall Retail | National Australia vs. Gold Road Resources | National Australia vs. Saferoads Holdings | National Australia vs. Hansen Technologies |
Pact Group vs. Hansen Technologies | Pact Group vs. Ainsworth Game Technology | Pact Group vs. Medical Developments International | Pact Group vs. Readytech 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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