Correlation Between National Australia and Viva Leisure

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

Diversification Opportunities for National Australia and Viva Leisure

-0.64

Correlation Coefficient

National Australia  Viva Leisure

Excellent diversification

The 3 months correlation between National and Viva is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Viva Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viva Leisure 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 Viva Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viva Leisure has no effect on the direction of National Australia i.e., National Australia and Viva Leisure go up and down completely randomly.

Pair Corralation between National Australia and Viva Leisure

Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.07 times more return on investment than Viva Leisure. However, National Australia Bank is 15.21 times less risky than Viva Leisure. It trades about 0.08 of its potential returns per unit of risk. Viva Leisure is currently generating about -0.06 per unit of risk. If you would invest  10,353  in National Australia Bank on December 29, 2024 and sell it today you would earn a total of  79.00  from holding National Australia Bank or generate 0.76% return on investment over 90 days.

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

National Australia Bank  vs.  Viva Leisure

National Australia Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Australia Bank are ranked lower than 5 (%) 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.

Viva Leisure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viva Leisure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with National Australia and Viva Leisure

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

The idea behind National Australia Bank and Viva Leisure 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..