Correlation Between National Australia and Ras Technology
Can any of the company-specific risk be diversified away by investing in both National Australia and Ras Technology 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 Ras Technology 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 Ras Technology Holdings, you can compare the effects of market volatilities on National Australia and Ras Technology 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 Ras Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Ras Technology.
Diversification Opportunities for National Australia and Ras Technology
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Ras is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Ras Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ras Technology 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 Ras Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ras Technology Holdings has no effect on the direction of National Australia i.e., National Australia and Ras Technology go up and down completely randomly.
Pair Corralation between National Australia and Ras Technology
Assuming the 90 days trading horizon National Australia is expected to generate 10.39 times less return on investment than Ras Technology. But when comparing it to its historical volatility, National Australia Bank is 14.8 times less risky than Ras Technology. It trades about 0.07 of its potential returns per unit of risk. Ras Technology Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Ras Technology Holdings on December 2, 2024 and sell it today you would earn a total of 33.00 from holding Ras Technology Holdings or generate 78.57% 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. Ras Technology Holdings
Performance |
Timeline |
National Australia Bank |
Ras Technology Holdings |
National Australia and Ras Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Australia and Ras Technology
The main advantage of trading using opposite National Australia and Ras Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Ras Technology 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 Ras Technology will offset losses from the drop in Ras Technology's long position.National Australia vs. EMvision Medical Devices | National Australia vs. Chalice Mining Limited | National Australia vs. Truscott Mining Corp | National Australia vs. Australian Unity Office |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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