Correlation Between Energy Technologies and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Energy Technologies 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 Energy Technologies and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Technologies Limited and Westpac Banking, you can compare the effects of market volatilities on Energy Technologies 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 Energy Technologies with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Technologies and Westpac Banking.
Diversification Opportunities for Energy Technologies and Westpac Banking
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and Westpac is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Energy Technologies Limited and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Energy Technologies 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 Energy Technologies 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 Energy Technologies i.e., Energy Technologies and Westpac Banking go up and down completely randomly.
Pair Corralation between Energy Technologies and Westpac Banking
Assuming the 90 days trading horizon Energy Technologies Limited is expected to under-perform the Westpac Banking. In addition to that, Energy Technologies is 7.62 times more volatile than Westpac Banking. It trades about -0.04 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 9,580 in Westpac Banking on August 28, 2024 and sell it today you would earn a total of 880.00 from holding Westpac Banking or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Technologies Limited vs. Westpac Banking
Performance |
| Timeline |
| Energy Technologies |
| Westpac Banking |
Energy Technologies and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Technologies and Westpac Banking
The main advantage of trading using opposite Energy Technologies and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Technologies 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.| Energy Technologies vs. Aneka Tambang Tbk | Energy Technologies vs. Macquarie Group | Energy Technologies vs. Macquarie Group Ltd | Energy Technologies vs. Challenger |
| Westpac Banking vs. ABACUS STORAGE KING | Westpac Banking vs. Odyssey Energy | Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Origin Energy |
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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