Correlation Between Enegex NL and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Enegex NL 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 Enegex NL and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enegex NL and Westpac Banking Corp, you can compare the effects of market volatilities on Enegex NL 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 Enegex NL with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enegex NL and Westpac Banking.
Diversification Opportunities for Enegex NL and Westpac Banking
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Enegex and Westpac is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Enegex NL and Westpac Banking Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking Corp and Enegex NL 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 Enegex NL 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 Corp has no effect on the direction of Enegex NL i.e., Enegex NL and Westpac Banking go up and down completely randomly.
Pair Corralation between Enegex NL and Westpac Banking
Assuming the 90 days trading horizon Enegex NL is expected to under-perform the Westpac Banking. In addition to that, Enegex NL is 1.91 times more volatile than Westpac Banking Corp. It trades about -0.31 of its total potential returns per unit of risk. Westpac Banking Corp is currently generating about 0.27 per unit of volatility. If you would invest 3,164 in Westpac Banking Corp on September 5, 2024 and sell it today you would earn a total of 197.00 from holding Westpac Banking Corp or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Enegex NL vs. Westpac Banking Corp
Performance |
| Timeline |
| Enegex NL |
| Westpac Banking Corp |
Enegex NL and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enegex NL and Westpac Banking
The main advantage of trading using opposite Enegex NL and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enegex NL 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.| Enegex NL vs. Queste Communications | Enegex NL vs. K2 Asset Management | Enegex NL vs. Singular Health Group | Enegex NL vs. Platinum Asset Management |
| Westpac Banking vs. Truscott Mining Corp | Westpac Banking vs. Evolution Mining | Westpac Banking vs. Mount Gibson Iron | Westpac Banking vs. M3 Mining |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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