Correlation Between EVE Health and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both EVE Health 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 EVE Health and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVE Health Group and Westpac Banking, you can compare the effects of market volatilities on EVE Health 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 EVE Health with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVE Health and Westpac Banking.
Diversification Opportunities for EVE Health and Westpac Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EVE and Westpac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EVE Health Group and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and EVE Health 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 EVE Health Group 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 EVE Health i.e., EVE Health and Westpac Banking go up and down completely randomly.
Pair Corralation between EVE Health and Westpac Banking
Assuming the 90 days trading horizon EVE Health Group is expected to generate 24.28 times more return on investment than Westpac Banking. However, EVE Health is 24.28 times more volatile than Westpac Banking. It trades about 0.03 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.12 per unit of risk. If you would invest 0.10 in EVE Health Group on September 2, 2024 and sell it today you would earn a total of 0.00 from holding EVE Health Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 47.6% |
| Values | Daily Returns |
EVE Health Group vs. Westpac Banking
Performance |
| Timeline |
| EVE Health Group |
| Westpac Banking |
EVE Health and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVE Health and Westpac Banking
The main advantage of trading using opposite EVE Health and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVE Health 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.| EVE Health vs. Aneka Tambang Tbk | EVE Health vs. Woolworths | EVE Health vs. Commonwealth Bank | EVE Health vs. BHP Group Limited |
| Westpac Banking vs. Westpac Banking | Westpac Banking vs. Imricor Medical Systems | Westpac Banking vs. Midway | Westpac Banking vs. Aristocrat Leisure |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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