Correlation Between Berkeley Energy and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Berkeley Energy 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 Berkeley Energy and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkeley Energy and Westpac Banking, you can compare the effects of market volatilities on Berkeley Energy 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 Berkeley Energy with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkeley Energy and Westpac Banking.
Diversification Opportunities for Berkeley Energy and Westpac Banking
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Berkeley and Westpac is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Berkeley Energy and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Berkeley Energy 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 Berkeley Energy 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 Berkeley Energy i.e., Berkeley Energy and Westpac Banking go up and down completely randomly.
Pair Corralation between Berkeley Energy and Westpac Banking
Assuming the 90 days trading horizon Berkeley Energy is expected to generate 15.7 times more return on investment than Westpac Banking. However, Berkeley Energy is 15.7 times more volatile than Westpac Banking. It trades about 0.01 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.07 per unit of risk. If you would invest 40.00 in Berkeley Energy on September 2, 2024 and sell it today you would lose (5.00) from holding Berkeley Energy or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkeley Energy vs. Westpac Banking
Performance |
| Timeline |
| Berkeley Energy |
| Westpac Banking |
Berkeley Energy and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkeley Energy and Westpac Banking
The main advantage of trading using opposite Berkeley Energy and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkeley Energy 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.| Berkeley Energy vs. Westpac Banking | Berkeley Energy vs. ABACUS STORAGE KING | Berkeley Energy vs. Odyssey Energy | Berkeley Energy vs. Imricor Medical Systems |
| Westpac Banking vs. Kneomedia | Westpac Banking vs. Alternative Investment Trust | Westpac Banking vs. Autosports Group | Westpac Banking vs. Navigator Global Investments |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |