Correlation Between Apple and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Apple and Westpac Banking 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 Apple and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Westpac Banking Corp, you can compare the effects of market volatilities on Apple and Westpac Banking 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 Apple with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Westpac Banking.
Diversification Opportunities for Apple and Westpac Banking
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Apple and Westpac is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Westpac Banking Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking Corp and Apple 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 Apple Inc are associated (or correlated) with Westpac Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westpac Banking Corp has no effect on the direction of Apple i.e., Apple and Westpac Banking go up and down completely randomly.
Pair Corralation between Apple and Westpac Banking
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Westpac Banking. In addition to that, Apple is 12.76 times more volatile than Westpac Banking Corp. It trades about -0.08 of its total potential returns per unit of risk. Westpac Banking Corp is currently generating about 0.03 per unit of volatility. If you would invest 10,150 in Westpac Banking Corp on November 3, 2024 and sell it today you would earn a total of 8.00 from holding Westpac Banking Corp or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Apple Inc vs. Westpac Banking Corp
Performance |
| Timeline |
| Apple Inc |
| Westpac Banking Corp |
Apple and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Westpac Banking
The main advantage of trading using opposite Apple and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Westpac Banking 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 Westpac Banking will offset losses from the drop in Westpac Banking's long position.The idea behind Apple Inc and Westpac Banking Corp 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.| Westpac Banking vs. Skycity Entertainment Group | Westpac Banking vs. EMvision Medical Devices | Westpac Banking vs. Air New Zealand | Westpac Banking vs. Infomedia |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |