Correlation Between Champion Iron and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Champion Iron 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 Champion Iron and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Westpac Banking, you can compare the effects of market volatilities on Champion Iron 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 Champion Iron with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Westpac Banking.
Diversification Opportunities for Champion Iron and Westpac Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Champion and Westpac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Champion Iron 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 Champion Iron 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 Champion Iron i.e., Champion Iron and Westpac Banking go up and down completely randomly.
Pair Corralation between Champion Iron and Westpac Banking
Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Westpac Banking. In addition to that, Champion Iron is 16.78 times more volatile than Westpac Banking. It trades about -0.03 of its total potential returns per unit of risk. Westpac Banking is currently generating about 0.08 per unit of volatility. If you would invest 9,736 in Westpac Banking on September 1, 2024 and sell it today you would earn a total of 296.00 from holding Westpac Banking or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Westpac Banking
Performance |
| Timeline |
| Champion Iron |
| Westpac Banking |
Champion Iron and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Westpac Banking
The main advantage of trading using opposite Champion Iron and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron 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.| Champion Iron vs. Dicker Data | Champion Iron vs. Data3 | Champion Iron vs. Retail Food Group | Champion Iron vs. Charter Hall Retail |
| Westpac Banking vs. Macquarie Group | Westpac Banking vs. Rio Tinto | Westpac Banking vs. CSL | Westpac Banking vs. Commonwealth Bank of |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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