Performance Analysis of NAB and ASX200 (2013-2016) Report

This report provides a detailed analysis of National Australia Bank (NAB) investments from 2013 to 2016. It begins with an introduction to portfolio diversification and its importance in reducing investment risk. The report then examines the performance of NAB shares in relation to the S&P/ASX 200 index during the specified period, highlighting trends and interpretations of the market data. A discussion section follows, offering an overview of NAB as the fourth-largest bank in Australia, and explores the systematic and unsystematic risks affecting the company. Unsystematic risk is discussed in the context of NAB's risk management strategies. The report also addresses the impact of systematic risks, such as interest rate changes. Finally, the report concludes with an investment recommendation, suggesting that investment in NAB is favorable due to its robust risk management. The report references several academic sources and online resources to support its findings.

FINANCE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1.1 Concept of diversification in an investment portfolio...........................................................3
2.0 Performance of overall stock market index S&P/ASX 200 and firm shares from 2013-16..3
3.0 Discussion section.....................................................................................................................4
3.1 Overview of NAB (National Bank of Australia)...................................................................4
3.2 Unsystematic risk affecting NAB company from 2013-16...................................................4
3.3 Systematic risk affecting firm from 2013-16.........................................................................4
Task 4...............................................................................................................................................4
4.0 Investment recommendation and conclusion.........................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Stock market is one whose study needed to be done to make investment related decisions.
In the current report, diversification concept is explained in detail and performance of the market
relative to firm is discussed in detail. Along with this, systematic and unsystematic risk that are
associated with the firm are also discussed in report. On the basis of evaluation of risk
recommendation are given.
1.1 Concept of diversification in an investment portfolio
Diversification of portfolio is necessary because by doing so risk on the portfolio is
reduced. If few securities are placed in the portfolio then in that case risk of individual security
may affect return of the portfolio (Bollen, Mao. and Zeng, 2011). But when multiple stocks are
included in the portfolio weight of risk associated with single security reduced in the portfolio.
2.0 Performance of overall stock market index S&P/ASX 200 and firm shares from 2013-16
Figure 1NAB and ASX200
Interpretation
It can be observed that from the FY 2013 to FY2015 both index and share price of NAB
increased to great extent (Van Rooij, Lusard and Alessie, 2011). But thereafter both NAB and
ASX200 value declined together. From the starting month of January sharp plunge comes in

NAB price and it reach the level that was in 2015 from where declined comes in stock market
index and share price. It can be said that overall NAB give good return to investors
3.0 Discussion section
3.1 Overview of NAB (National Bank of Australia)
NAB is the one of the largest bank of Australia as it is fourth largest bank in the
mentioned nation (Edmans, 2011). Apart from this, it is the 41st largest bank in the world.
Currently, mentioned firm is operating 1590 branches. It can be said that mentioned bank is giant
in nature.
3.2 Unsystematic risk affecting NAB company from 2013-16
Unsystematic risk refers to the risk that can be diversified. Unsystematic risk does not
affect so much to the business firm because it formulate strategy to handle the risky situation
(Zhang, Fuehres and Gloor, 2011). There is risk management team of NAB which formulate
strategy on time and due to this reason unsystematic risk does not affect NAB to large extent.
3.3 Systematic risk affecting firm from 2013-16
Systematic risk positively affecting business firm as it is not possible to diversify risk that
originate due to changes in the interest rate structure that are made by the central bank of the
nation (Australia interest rate, 2017). Central bank of the nation reduce interest rate which
positively affect NAB and it can be said that systematic risk positively affect firm from 2011-16.
Task 4
4.0 Investment recommendation and conclusion
It is recommended that investment must be made in the business firm. This is because
firm have strong risk management system and due to this reason it is able to handle risk in
legitimate way. It is concluded that firm is the best investment alternative that is available to the
investors. While making investment one must consider both sort of risks because by doing so
best investment decision can be taken by the investors.

REFERENCES
Books and journals
Bollen, J., Mao, H. and Zeng, X., 2011. Twitter mood predicts the stock market. Journal of
computational science. 2(1). pp.1-8.
Edmans, A., 2011. Does the stock market fully value intangibles? Employee satisfaction and
equity prices. Journal of Financial Economics. 101(3). pp.621-640.
Van Rooij, M., Lusardi, A. and Alessie, R., 2011. Financial literacy and stock market
participation. Journal of Financial Economics. 101(2). pp.449-472.
Zhang, X., Fuehres, H. and Gloor, P.A., 2011. Predicting stock market indicators through twitter
“I hope it is not as bad as I fear”. Procedia-Social and Behavioral Sciences. 26. pp.55-62.
Online
Australia interest rate, 2017. [Online]. Available through :<
http://www.tradingeconomics.com/australia/interest-rate>. [Accessed on 15th May 2017].