Correlation Between Cardno and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Cardno 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 Cardno and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardno and Westpac Banking Corp, you can compare the effects of market volatilities on Cardno 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 Cardno with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardno and Westpac Banking.
Diversification Opportunities for Cardno and Westpac Banking
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardno and Westpac is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cardno and Westpac Banking Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking Corp and Cardno 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 Cardno 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 Corp has no effect on the direction of Cardno i.e., Cardno and Westpac Banking go up and down completely randomly.
Pair Corralation between Cardno and Westpac Banking
Assuming the 90 days trading horizon Cardno is expected to generate 8.54 times more return on investment than Westpac Banking. However, Cardno is 8.54 times more volatile than Westpac Banking Corp. It trades about 0.34 of its potential returns per unit of risk. Westpac Banking Corp is currently generating about 0.27 per unit of risk. If you would invest 14.00 in Cardno on September 5, 2024 and sell it today you would earn a total of 11.00 from holding Cardno or generate 78.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardno vs. Westpac Banking Corp
Performance |
| Timeline |
| Cardno |
| Westpac Banking Corp |
Cardno and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardno and Westpac Banking
The main advantage of trading using opposite Cardno and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardno 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.| Cardno vs. Clime Investment Management | Cardno vs. Perseus Mining | Cardno vs. Alto Metals | Cardno vs. Hutchison Telecommunications |
| Westpac Banking vs. Truscott Mining Corp | Westpac Banking vs. Evolution Mining | Westpac Banking vs. Mount Gibson Iron | Westpac Banking vs. M3 Mining |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |