Correlation Between National Australia and Midway
Can any of the company-specific risk be diversified away by investing in both National Australia and Midway 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 Midway 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 Midway, you can compare the effects of market volatilities on National Australia and Midway 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 Midway. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Midway.
Diversification Opportunities for National Australia and Midway
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Midway is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Midway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midway 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 Midway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midway has no effect on the direction of National Australia i.e., National Australia and Midway go up and down completely randomly.
Pair Corralation between National Australia and Midway
Assuming the 90 days trading horizon National Australia is expected to generate 37.62 times less return on investment than Midway. But when comparing it to its historical volatility, National Australia Bank is 31.28 times less risky than Midway. It trades about 0.07 of its potential returns per unit of risk. Midway is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Midway on September 7, 2024 and sell it today you would earn a total of 30.00 from holding Midway or generate 31.58% 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. Midway
Performance |
Timeline |
National Australia Bank |
Midway |
National Australia and Midway Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Australia and Midway
The main advantage of trading using opposite National Australia and Midway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Midway 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 Midway will offset losses from the drop in Midway's long position.National Australia vs. Westpac Banking | National Australia vs. Commonwealth Bank | National Australia vs. Commonwealth Bank of | National Australia vs. Westpac Banking Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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