Correlation Between Paysafe and NATIONAL

Can any of the company-specific risk be diversified away by investing in both Paysafe and NATIONAL 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 Paysafe and NATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Paysafe and NATIONAL AUSTRALIA BK, you can compare the effects of market volatilities on Paysafe and NATIONAL 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 Paysafe with a short position of NATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paysafe and NATIONAL.

Diversification Opportunities for Paysafe and NATIONAL

0.09

Correlation Coefficient

Paysafe  NATIONAL

Significant diversification

The 3 months correlation between Paysafe and NATIONAL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe and NATIONAL AUSTRALIA BK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL AUSTRALIA and Paysafe 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 Paysafe are associated (or correlated) with NATIONAL. 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 has no effect on the direction of Paysafe i.e., Paysafe and NATIONAL go up and down completely randomly.

Pair Corralation between Paysafe and NATIONAL

Given the investment horizon of 90 days Paysafe is expected to under-perform the NATIONAL. In addition to that, Paysafe is 10.89 times more volatile than NATIONAL AUSTRALIA BK. It trades about -0.09 of its total potential returns per unit of risk. NATIONAL AUSTRALIA BK is currently generating about -0.2 per unit of volatility. If you would invest  9,919  in NATIONAL AUSTRALIA BK on September 19, 2024 and sell it today you would lose (233.00) from holding NATIONAL AUSTRALIA BK or give up 2.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Paysafe  vs.  NATIONAL AUSTRALIA BK

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NATIONAL AUSTRALIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL AUSTRALIA BK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NATIONAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Paysafe and NATIONAL

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

The idea behind Paysafe and NATIONAL AUSTRALIA BK 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.