Correlation Between NAT BANK and SUNCORP PREF

Can any of the company-specific risk be diversified away by investing in both NAT BANK and SUNCORP PREF 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 NAT BANK and SUNCORP PREF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NAT BANK CPS and SUNCORP PREF CPS3, you can compare the effects of market volatilities on NAT BANK and SUNCORP PREF 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 NAT BANK with a short position of SUNCORP PREF. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAT BANK and SUNCORP PREF.

Diversification Opportunities for NAT BANK and SUNCORP PREF

0.0

Correlation Coefficient

NAT BANK  SUNCORP PREF

Pay attention - limited upside

The 3 months correlation between NAT and SUNCORP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NAT BANK CPS and SUNCORP PREF CPS3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNCORP PREF CPS3 and NAT BANK 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 NAT BANK CPS are associated (or correlated) with SUNCORP PREF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNCORP PREF CPS3 has no effect on the direction of NAT BANK i.e., NAT BANK and SUNCORP PREF go up and down completely randomly.

Pair Corralation between NAT BANK and SUNCORP PREF

If you would invest (100.00) in SUNCORP PREF CPS3 on December 20, 2024 and sell it today you would earn a total of  100.00  from holding SUNCORP PREF CPS3 or generate -100.0% return on investment over 90 days.

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

NAT BANK CPS  vs.  SUNCORP PREF CPS3

NAT BANK CPS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAT BANK CPS has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, NAT BANK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SUNCORP PREF CPS3

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUNCORP PREF CPS3 has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, SUNCORP PREF is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NAT BANK and SUNCORP PREF

The main advantage of trading using opposite NAT BANK and SUNCORP PREF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAT BANK position performs unexpectedly, SUNCORP PREF 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 SUNCORP PREF will offset losses from the drop in SUNCORP PREF's long position.

The idea behind NAT BANK CPS and SUNCORP PREF CPS3 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.