Correlation Between National Australia and BKI Investment

Can any of the company-specific risk be diversified away by investing in both National Australia and BKI Investment 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 BKI Investment 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 BKI Investment, you can compare the effects of market volatilities on National Australia and BKI Investment 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 BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and BKI Investment.

Diversification Opportunities for National Australia and BKI Investment

0.84

Correlation Coefficient

National Australia  BKI Investment

Very poor diversification

The 3 months correlation between National and BKI is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment 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 BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of National Australia i.e., National Australia and BKI Investment go up and down completely randomly.

Pair Corralation between National Australia and BKI Investment

Assuming the 90 days trading horizon National Australia is expected to generate 5.73 times less return on investment than BKI Investment. But when comparing it to its historical volatility, National Australia Bank is 4.28 times less risky than BKI Investment. It trades about 0.13 of its potential returns per unit of risk. BKI Investment is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  167.00  in BKI Investment on April 25, 2025 and sell it today you would earn a total of  12.00  from holding BKI Investment or generate 7.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

National Australia Bank  vs.  BKI Investment

National Australia Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Australia Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, National Australia is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

BKI Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKI Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, BKI Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with National Australia and BKI Investment

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

The idea behind National Australia Bank and BKI Investment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.