Correlation Between Energy Resources and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Energy 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 Energy 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 Energy Resources and Westpac Banking, you can compare the effects of market volatilities on Energy 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 Energy Resources with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Resources and Westpac Banking.
Diversification Opportunities for Energy Resources and Westpac Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Energy and Westpac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Energy Resources and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Energy 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 Energy Resources 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 Resources i.e., Energy Resources and Westpac Banking go up and down completely randomly.
Pair Corralation between Energy Resources and Westpac Banking
If you would invest 0.30 in Energy Resources on September 1, 2024 and sell it today you would lose (0.10) from holding Energy Resources or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Energy Resources vs. Westpac Banking
Performance |
| Timeline |
| Energy Resources |
| Westpac Banking |
Energy Resources and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Resources and Westpac Banking
The main advantage of trading using opposite Energy Resources and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy 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.| Energy Resources vs. Clime Investment Management | Energy Resources vs. Hotel Property Investments | Energy Resources vs. Charter Hall Retail | Energy Resources vs. Garda Diversified Ppty |
| Westpac Banking vs. Macquarie Group | Westpac Banking vs. Rio Tinto | Westpac Banking vs. CSL | Westpac Banking vs. Commonwealth Bank of |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance |