Correlation Between Bisalloy Steel and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Bisalloy Steel 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 Bisalloy Steel and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bisalloy Steel Group and Westpac Banking, you can compare the effects of market volatilities on Bisalloy Steel 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 Bisalloy Steel with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bisalloy Steel and Westpac Banking.
Diversification Opportunities for Bisalloy Steel and Westpac Banking
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bisalloy and Westpac is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bisalloy Steel Group and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Bisalloy Steel 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 Bisalloy Steel Group 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 Bisalloy Steel i.e., Bisalloy Steel and Westpac Banking go up and down completely randomly.
Pair Corralation between Bisalloy Steel and Westpac Banking
Assuming the 90 days trading horizon Bisalloy Steel Group is expected to generate 9.31 times more return on investment than Westpac Banking. However, Bisalloy Steel is 9.31 times more volatile than Westpac Banking. It trades about 0.07 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.1 per unit of risk. If you would invest 187.00 in Bisalloy Steel Group on September 12, 2024 and sell it today you would earn a total of 253.00 from holding Bisalloy Steel Group or generate 135.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 49.0% |
| Values | Daily Returns |
Bisalloy Steel Group vs. Westpac Banking
Performance |
| Timeline |
| Bisalloy Steel Group |
| Westpac Banking |
Bisalloy Steel and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bisalloy Steel and Westpac Banking
The main advantage of trading using opposite Bisalloy Steel and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bisalloy Steel 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.| Bisalloy Steel vs. Australian Unity Office | Bisalloy Steel vs. EROAD | Bisalloy Steel vs. Stelar Metals | Bisalloy Steel vs. Home Consortium |
| Westpac Banking vs. Navigator Global Investments | Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Garda Diversified Ppty | Westpac Banking vs. Australian United Investment |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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