Correlation Between Auswide Bank and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Auswide Bank 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 Auswide Bank and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auswide Bank and Westpac Banking, you can compare the effects of market volatilities on Auswide Bank 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 Auswide Bank with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auswide Bank and Westpac Banking.
Diversification Opportunities for Auswide Bank and Westpac Banking
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Auswide and Westpac is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Auswide Bank and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Auswide Bank 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 Auswide Bank 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 has no effect on the direction of Auswide Bank i.e., Auswide Bank and Westpac Banking go up and down completely randomly.
Pair Corralation between Auswide Bank and Westpac Banking
Assuming the 90 days trading horizon Auswide Bank is expected to generate 7.87 times more return on investment than Westpac Banking. However, Auswide Bank is 7.87 times more volatile than Westpac Banking. It trades about 0.14 of its potential returns per unit of risk. Westpac Banking is currently generating about -0.32 per unit of risk. If you would invest 417.00 in Auswide Bank on August 27, 2024 and sell it today you would earn a total of 23.00 from holding Auswide Bank or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auswide Bank vs. Westpac Banking
Performance |
| Timeline |
| Auswide Bank |
| Westpac Banking |
Auswide Bank and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auswide Bank and Westpac Banking
The main advantage of trading using opposite Auswide Bank and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auswide Bank 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.| Auswide Bank vs. Aneka Tambang Tbk | Auswide Bank vs. BHP Group Limited | Auswide Bank vs. Commonwealth Bank of | Auswide Bank vs. Commonwealth Bank of |
| Westpac Banking vs. Origin Energy | Westpac Banking vs. Insurance Australia Group | Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Ecofibre |
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 CEOs Directory module to screen CEOs from public companies around the world.
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