Correlation Between Carawine Resources and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Carawine Resources 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 Carawine Resources and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carawine Resources Limited and Westpac Banking, you can compare the effects of market volatilities on Carawine Resources 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 Carawine Resources with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carawine Resources and Westpac Banking.
Diversification Opportunities for Carawine Resources and Westpac Banking
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carawine and Westpac is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Carawine Resources Limited and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Carawine Resources 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 Carawine Resources Limited 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 Carawine Resources i.e., Carawine Resources and Westpac Banking go up and down completely randomly.
Pair Corralation between Carawine Resources and Westpac Banking
Assuming the 90 days trading horizon Carawine Resources Limited is expected to generate 13.82 times more return on investment than Westpac Banking. However, Carawine Resources is 13.82 times more volatile than Westpac Banking. It trades about 0.02 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.08 per unit of risk. If you would invest 9.50 in Carawine Resources Limited on November 28, 2024 and sell it today you would earn a total of 0.50 from holding Carawine Resources Limited or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carawine Resources Limited vs. Westpac Banking
Performance |
| Timeline |
| Carawine Resources |
| Westpac Banking |
Carawine Resources and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carawine Resources and Westpac Banking
The main advantage of trading using opposite Carawine Resources and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carawine Resources 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.| Carawine Resources vs. ACDC Metals | Carawine Resources vs. Lykos Metals | Carawine Resources vs. MFF Capital Investments | Carawine Resources vs. Hammer Metals |
| Westpac Banking vs. Australian Agricultural | Westpac Banking vs. Centaurus Metals | Westpac Banking vs. Polymetals Resources | Westpac Banking vs. MA Financial Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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