Correlation Between Charter Hall and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Charter Hall 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 Charter Hall and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Hall Retail and Westpac Banking, you can compare the effects of market volatilities on Charter Hall 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 Charter Hall with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Westpac Banking.
Diversification Opportunities for Charter Hall and Westpac Banking
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charter and Westpac is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Charter Hall 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 Charter Hall Retail 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 Charter Hall i.e., Charter Hall and Westpac Banking go up and down completely randomly.
Pair Corralation between Charter Hall and Westpac Banking
Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the Westpac Banking. In addition to that, Charter Hall is 2.36 times more volatile than Westpac Banking. It trades about -0.2 of its total potential returns per unit of risk. Westpac Banking is currently generating about 0.01 per unit of volatility. If you would invest 10,608 in Westpac Banking on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Westpac Banking or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Retail vs. Westpac Banking
Performance |
| Timeline |
| Charter Hall Retail |
| Westpac Banking |
Charter Hall and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Westpac Banking
The main advantage of trading using opposite Charter Hall and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall 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.| Charter Hall vs. Pinnacle Investment Management | Charter Hall vs. Skycity Entertainment Group | Charter Hall vs. BKI Investment | Charter Hall vs. Beston Global Food |
| Westpac Banking vs. Premier Investments | Westpac Banking vs. REGAL ASIAN INVESTMENTS | Westpac Banking vs. MFF Capital Investments | Westpac Banking vs. Dexus Convenience Retail |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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