Correlation Between Brookside Energy and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Brookside 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 Brookside 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 Brookside Energy and Westpac Banking, you can compare the effects of market volatilities on Brookside 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 Brookside Energy with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookside Energy and Westpac Banking.
Diversification Opportunities for Brookside Energy and Westpac Banking
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookside and Westpac is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Brookside Energy and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Brookside 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 Brookside 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 Brookside Energy i.e., Brookside Energy and Westpac Banking go up and down completely randomly.
Pair Corralation between Brookside Energy and Westpac Banking
Assuming the 90 days trading horizon Brookside Energy is expected to generate 10.77 times more return on investment than Westpac Banking. However, Brookside Energy is 10.77 times more volatile than Westpac Banking. It trades about 0.25 of its potential returns per unit of risk. Westpac Banking is currently generating about -0.08 per unit of risk. If you would invest 45.00 in Brookside Energy on October 15, 2024 and sell it today you would earn a total of 5.00 from holding Brookside Energy or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookside Energy vs. Westpac Banking
Performance |
| Timeline |
| Brookside Energy |
| Westpac Banking |
Brookside Energy and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookside Energy and Westpac Banking
The main advantage of trading using opposite Brookside Energy and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookside 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.| Brookside Energy vs. Westpac Banking | Brookside Energy vs. ABACUS STORAGE KING | Brookside Energy vs. Odyssey Energy | Brookside Energy vs. Qantas Airways |
| Westpac Banking vs. Sports Entertainment Group | Westpac Banking vs. Magellan Financial Group | Westpac Banking vs. Perseus Mining | Westpac Banking vs. ACDC Metals |
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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