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, 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
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Enegex and Westpac is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Enegex NL and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking 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 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 17.92 times more volatile than Westpac Banking. It trades about -0.02 of its total potential returns per unit of risk. Westpac Banking is currently generating about 0.07 per unit of volatility. If you would invest 9,823 in Westpac Banking on September 14, 2024 and sell it today you would earn a total of 548.00 from holding Westpac Banking or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enegex NL vs. Westpac Banking
Performance |
| Timeline |
| Enegex NL |
| Westpac Banking |
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. Stelar Metals | Enegex NL vs. Pinnacle Investment Management | Enegex NL vs. Retail Food Group | Enegex NL vs. Sky Metals |
| Westpac Banking vs. WiseTech Global Limited | Westpac Banking vs. Thorney Technologies | Westpac Banking vs. Mirrabooka Investments | Westpac Banking vs. Microequities Asset Management |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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