Correlation Between National Australia and Svenska Handelsbanken
Can any of the company-specific risk be diversified away by investing in both National Australia and Svenska Handelsbanken 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 Svenska Handelsbanken 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 Svenska Handelsbanken PK, you can compare the effects of market volatilities on National Australia and Svenska Handelsbanken 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 Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Svenska Handelsbanken.
Diversification Opportunities for National Australia and Svenska Handelsbanken
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Svenska is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Svenska Handelsbanken PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken 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 Svenska Handelsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Handelsbanken has no effect on the direction of National Australia i.e., National Australia and Svenska Handelsbanken go up and down completely randomly.
Pair Corralation between National Australia and Svenska Handelsbanken
Assuming the 90 days horizon National Australia Bank is expected to generate 0.1 times more return on investment than Svenska Handelsbanken. However, National Australia Bank is 9.93 times less risky than Svenska Handelsbanken. It trades about 0.21 of its potential returns per unit of risk. Svenska Handelsbanken PK is currently generating about -0.18 per unit of risk. If you would invest 2,270 in National Australia Bank on January 31, 2024 and sell it today you would earn a total of 35.00 from holding National Australia Bank or generate 1.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
National Australia Bank vs. Svenska Handelsbanken PK
Performance |
Timeline |
National Australia Bank |
Svenska Handelsbanken |
National Australia and Svenska Handelsbanken Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Australia and Svenska Handelsbanken
The main advantage of trading using opposite National Australia and Svenska Handelsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Svenska Handelsbanken 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 Svenska Handelsbanken will offset losses from the drop in Svenska Handelsbanken's long position.National Australia vs. Bank of America | National Australia vs. Mitsubishi UFJ Financial | National Australia vs. Natwest Group PLC |
Svenska Handelsbanken vs. Bank of America | Svenska Handelsbanken vs. Mitsubishi UFJ Financial | Svenska Handelsbanken vs. Natwest Group PLC |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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