Correlation Between Andean Silver and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Andean Silver 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 Andean Silver and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Andean Silver Limited and Westpac Banking, you can compare the effects of market volatilities on Andean Silver 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 Andean Silver with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andean Silver and Westpac Banking.
Diversification Opportunities for Andean Silver and Westpac Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Andean and Westpac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Andean Silver Limited and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Andean Silver 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 Andean Silver Limited 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 Andean Silver i.e., Andean Silver and Westpac Banking go up and down completely randomly.
Pair Corralation between Andean Silver and Westpac Banking
Assuming the 90 days trading horizon Andean Silver Limited is expected to generate 41.2 times more return on investment than Westpac Banking. However, Andean Silver is 41.2 times more volatile than Westpac Banking. It trades about 0.13 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.08 per unit of risk. If you would invest 23.00 in Andean Silver Limited on August 25, 2024 and sell it today you would earn a total of 77.00 from holding Andean Silver Limited or generate 334.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 92.65% |
| Values | Daily Returns |
Andean Silver Limited vs. Westpac Banking
Performance |
| Timeline |
| Andean Silver Limited |
| Westpac Banking |
Andean Silver and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Andean Silver and Westpac Banking
The main advantage of trading using opposite Andean Silver and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andean Silver 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.| Andean Silver vs. Northern Star Resources | Andean Silver vs. Evolution Mining | Andean Silver vs. Bluescope Steel | Andean Silver vs. Sandfire Resources NL |
| Westpac Banking vs. Perseus Mining | Westpac Banking vs. Black Rock Mining | Westpac Banking vs. Aeon Metals | Westpac Banking vs. Andean Silver Limited |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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