Correlation Between National Australia and Garda Diversified

Can any of the company-specific risk be diversified away by investing in both National Australia and Garda Diversified 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 Garda Diversified 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 Garda Diversified Ppty, you can compare the effects of market volatilities on National Australia and Garda Diversified 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 Garda Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Garda Diversified.

Diversification Opportunities for National Australia and Garda Diversified

0.09

Correlation Coefficient

National Australia  Garda Diversified

Significant diversification

The 3 months correlation between National and Garda is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Garda Diversified Ppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garda Diversified Ppty 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 Garda Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garda Diversified Ppty has no effect on the direction of National Australia i.e., National Australia and Garda Diversified go up and down completely randomly.

Pair Corralation between National Australia and Garda Diversified

Assuming the 90 days trading horizon National Australia is expected to generate 8.54 times less return on investment than Garda Diversified. But when comparing it to its historical volatility, National Australia Bank is 5.24 times less risky than Garda Diversified. It trades about 0.03 of its potential returns per unit of risk. Garda Diversified Ppty is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  115.00  in Garda Diversified Ppty on October 8, 2024 and sell it today you would earn a total of  5.00  from holding Garda Diversified Ppty or generate 4.35% return on investment over 90 days.

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

National Australia Bank  vs.  Garda Diversified Ppty

National Australia Bank

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Australia Bank are ranked lower than 2 (%) 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.

Garda Diversified Ppty

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Garda Diversified Ppty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Garda Diversified is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Australia and Garda Diversified

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

The idea behind National Australia Bank and Garda Diversified Ppty 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.