Correlation Between De Grey and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Westpac Banking, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Westpac Banking.
Diversification Opportunities for De Grey and Westpac Banking
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DEG and Westpac is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and Westpac Banking go up and down completely randomly.
Pair Corralation between De Grey and Westpac Banking
Assuming the 90 days trading horizon De Grey Mining is expected to generate 7.69 times more return on investment than Westpac Banking. However, De Grey is 7.69 times more volatile than Westpac Banking. It trades about 0.07 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.07 per unit of risk. If you would invest 124.00 in De Grey Mining on September 14, 2024 and sell it today you would earn a total of 71.00 from holding De Grey Mining or generate 57.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
De Grey Mining vs. Westpac Banking
Performance |
| Timeline |
| De Grey Mining |
| Westpac Banking |
De Grey and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Westpac Banking
The main advantage of trading using opposite De Grey and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.| De Grey vs. Northern Star Resources | De Grey vs. Evolution Mining | De Grey vs. Bluescope Steel | De Grey vs. Sandfire Resources NL |
| Westpac Banking vs. Pointsbet Holdings | Westpac Banking vs. De Grey Mining | Westpac Banking vs. Telix Pharmaceuticals | Westpac Banking vs. Sims |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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