Correlation Between NATIONAL and Evertz Technologies

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

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

Diversification Opportunities for NATIONAL and Evertz Technologies

-0.15

Correlation Coefficient

NATIONAL  Evertz Technologies

Good diversification

The 3 months correlation between NATIONAL and Evertz is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL AUSTRALIA BK and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies and NATIONAL 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 BK are associated (or correlated) with Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of NATIONAL i.e., NATIONAL and Evertz Technologies go up and down completely randomly.

Pair Corralation between NATIONAL and Evertz Technologies

Assuming the 90 days trading horizon NATIONAL AUSTRALIA BK is expected to under-perform the Evertz Technologies. But the bond apears to be less risky and, when comparing its historical volatility, NATIONAL AUSTRALIA BK is 3.18 times less risky than Evertz Technologies. The bond trades about -0.03 of its potential returns per unit of risk. The Evertz Technologies Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  872.00  in Evertz Technologies Limited on September 20, 2024 and sell it today you would earn a total of  2.00  from holding Evertz Technologies Limited or generate 0.23% return on investment over 90 days.

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

NATIONAL AUSTRALIA BK  vs.  Evertz Technologies Limited

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.

Evertz Technologies

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Evertz Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Evertz Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NATIONAL and Evertz Technologies

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

The idea behind NATIONAL AUSTRALIA BK and Evertz Technologies Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.