Correlation Between Advanced Braking and National Australia
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and National Australia 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 Advanced Braking and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Braking Technology and National Australia Bank, you can compare the effects of market volatilities on Advanced Braking and National Australia 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 Advanced Braking with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and National Australia.
Diversification Opportunities for Advanced Braking and National Australia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advanced and National is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and National Australia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Australia Bank and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with National Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Australia Bank has no effect on the direction of Advanced Braking i.e., Advanced Braking and National Australia go up and down completely randomly.
Pair Corralation between Advanced Braking and National Australia
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 9.85 times more return on investment than National Australia. However, Advanced Braking is 9.85 times more volatile than National Australia Bank. It trades about 0.05 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.07 per unit of risk. If you would invest 7.50 in Advanced Braking Technology on September 25, 2024 and sell it today you would earn a total of 0.50 from holding Advanced Braking Technology or generate 6.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Advanced Braking Technology vs. National Australia Bank
Performance |
Timeline |
Advanced Braking Tec |
National Australia Bank |
Advanced Braking and National Australia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Advanced Braking and National Australia
The main advantage of trading using opposite Advanced Braking and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, National Australia 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 National Australia will offset losses from the drop in National Australia's long position.Advanced Braking vs. Aneka Tambang Tbk | Advanced Braking vs. National Australia Bank | Advanced Braking vs. Commonwealth Bank of | Advanced Braking vs. Commonwealth Bank of |
National Australia vs. Westpac Banking | National Australia vs. Commonwealth Bank | National Australia vs. Commonwealth Bank of | National Australia vs. Commonwealth Bank of |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |