Correlation Between National Australia and RIO Tinto
Can any of the company-specific risk be diversified away by investing in both National Australia and RIO Tinto 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 RIO Tinto 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 RIO Tinto, you can compare the effects of market volatilities on National Australia and RIO Tinto 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 RIO Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and RIO Tinto.
Diversification Opportunities for National Australia and RIO Tinto
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and RIO is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and RIO Tinto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RIO Tinto 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 RIO Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RIO Tinto has no effect on the direction of National Australia i.e., National Australia and RIO Tinto go up and down completely randomly.
Pair Corralation between National Australia and RIO Tinto
Assuming the 90 days trading horizon National Australia Bank is expected to under-perform the RIO Tinto. But the stock apears to be less risky and, when comparing its historical volatility, National Australia Bank is 1.32 times less risky than RIO Tinto. The stock trades about -0.05 of its potential returns per unit of risk. The RIO Tinto is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 11,821 in RIO Tinto on September 6, 2025 and sell it today you would earn a total of 2,237 from holding RIO Tinto or generate 18.92% 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. RIO Tinto
Performance |
| Timeline |
| National Australia Bank |
| RIO Tinto |
National Australia and RIO Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and RIO Tinto
The main advantage of trading using opposite National Australia and RIO Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, RIO Tinto 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 RIO Tinto will offset losses from the drop in RIO Tinto's long position.| National Australia vs. Aurelia Metals | National Australia vs. Falcon Metals | National Australia vs. Centuria Industrial REIT | National Australia vs. Stelar Metals |
| RIO Tinto vs. Whitefield Industrials | RIO Tinto vs. BKI Investment | RIO Tinto vs. Farm Pride Foods | RIO Tinto vs. Clime Investment Management |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |