Correlation Between A1 Investments and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both A1 Investments 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 A1 Investments and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A1 Investments Resources and Westpac Banking, you can compare the effects of market volatilities on A1 Investments 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 A1 Investments with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1 Investments and Westpac Banking.
Diversification Opportunities for A1 Investments and Westpac Banking
-1.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AYI and Westpac is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding A1 Investments Resources and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and A1 Investments 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 A1 Investments Resources 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 A1 Investments i.e., A1 Investments and Westpac Banking go up and down completely randomly.
Pair Corralation between A1 Investments and Westpac Banking
Assuming the 90 days trading horizon A1 Investments Resources is expected to generate 23.45 times more return on investment than Westpac Banking. However, A1 Investments is 23.45 times more volatile than Westpac Banking. It trades about 0.02 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.05 per unit of risk. If you would invest 0.10 in A1 Investments Resources on September 12, 2024 and sell it today you would earn a total of 0.00 from holding A1 Investments Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
A1 Investments Resources vs. Westpac Banking
Performance |
| Timeline |
| A1 Investments Resources |
| Westpac Banking |
A1 Investments and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A1 Investments and Westpac Banking
The main advantage of trading using opposite A1 Investments and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1 Investments 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.| A1 Investments vs. Aneka Tambang Tbk | A1 Investments vs. Commonwealth Bank | A1 Investments vs. BHP Group Limited | A1 Investments vs. Rio Tinto |
| Westpac Banking vs. Aeon Metals | Westpac Banking vs. Ironbark Capital | Westpac Banking vs. Red Hill Iron | Westpac Banking vs. Hawsons Iron |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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