Correlation Between Embark Education and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Embark Education 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 Embark Education and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embark Education Group and Westpac Banking Corp, you can compare the effects of market volatilities on Embark Education 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 Embark Education with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Westpac Banking.
Diversification Opportunities for Embark Education and Westpac Banking
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Embark and Westpac is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group 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 Embark Education 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 Embark Education 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 Corp has no effect on the direction of Embark Education i.e., Embark Education and Westpac Banking go up and down completely randomly.
Pair Corralation between Embark Education and Westpac Banking
Assuming the 90 days trading horizon Embark Education Group is expected to generate 5.86 times more return on investment than Westpac Banking. However, Embark Education is 5.86 times more volatile than Westpac Banking Corp. It trades about 0.08 of its potential returns per unit of risk. Westpac Banking Corp is currently generating about 0.13 per unit of risk. If you would invest 77.00 in Embark Education Group on October 24, 2024 and sell it today you would earn a total of 1.00 from holding Embark Education Group or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Embark Education Group vs. Westpac Banking Corp
Performance |
| Timeline |
| Embark Education |
| Westpac Banking Corp |
Embark Education and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and Westpac Banking
The main advantage of trading using opposite Embark Education and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education 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.| Embark Education vs. MetalsGrove Mining | Embark Education vs. Regal Funds Management | Embark Education vs. Cleanaway Waste Management | Embark Education vs. Andean Silver Limited |
| Westpac Banking vs. Embark Education Group | Westpac Banking vs. Centrex Metals | Westpac Banking vs. Skycity Entertainment Group | Westpac Banking vs. Sports Entertainment Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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