Correlation Between Qantas Airways and Nedbank
Can any of the company-specific risk be diversified away by investing in both Qantas Airways and Nedbank 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 Qantas Airways and Nedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qantas Airways Limited and Nedbank Group, you can compare the effects of market volatilities on Qantas Airways and Nedbank 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 Qantas Airways with a short position of Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qantas Airways and Nedbank.
Diversification Opportunities for Qantas Airways and Nedbank
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Qantas and Nedbank is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways Limited and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group and Qantas Airways 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 Qantas Airways Limited are associated (or correlated) with Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Qantas Airways i.e., Qantas Airways and Nedbank go up and down completely randomly.
Pair Corralation between Qantas Airways and Nedbank
Assuming the 90 days horizon Qantas Airways Limited is expected to under-perform the Nedbank. But the pink sheet apears to be less risky and, when comparing its historical volatility, Qantas Airways Limited is 1.04 times less risky than Nedbank. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Nedbank Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,075 in Nedbank Group on January 26, 2024 and sell it today you would earn a total of 74.00 from holding Nedbank Group or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Qantas Airways Limited vs. Nedbank Group
Performance |
| Timeline |
| Qantas Airways |
| Nedbank Group |
Qantas Airways and Nedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qantas Airways and Nedbank
The main advantage of trading using opposite Qantas Airways and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qantas Airways position performs unexpectedly, Nedbank 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 Nedbank will offset losses from the drop in Nedbank's long position.| Qantas Airways vs. Deutsche Lufthansa AG | Qantas Airways vs. Air France KLM | Qantas Airways vs. Sun Country Airlines |
| Nedbank vs. Lloyds Banking Group | Nedbank vs. Western Alliance Bancorporation | Nedbank vs. JAPAN POST BANK | Nedbank vs. Piraeus Bank SA |
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.
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