Correlation Between Falcon Metals and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Falcon Metals 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 Falcon Metals and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Westpac Banking, you can compare the effects of market volatilities on Falcon Metals 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 Falcon Metals with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Westpac Banking.
Diversification Opportunities for Falcon Metals and Westpac Banking
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Falcon and Westpac is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Falcon Metals 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 Falcon Metals 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 Falcon Metals i.e., Falcon Metals and Westpac Banking go up and down completely randomly.
Pair Corralation between Falcon Metals and Westpac Banking
Assuming the 90 days trading horizon Falcon Metals is expected to generate 16.33 times more return on investment than Westpac Banking. However, Falcon Metals is 16.33 times more volatile than Westpac Banking. It trades about 0.12 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.05 per unit of risk. If you would invest 13.00 in Falcon Metals on November 7, 2024 and sell it today you would earn a total of 1.00 from holding Falcon Metals or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Westpac Banking
Performance |
| Timeline |
| Falcon Metals |
| Westpac Banking |
Falcon Metals and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Westpac Banking
The main advantage of trading using opposite Falcon Metals and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals 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.| Falcon Metals vs. Aeon Metals | Falcon Metals vs. 29Metals | Falcon Metals vs. Bell Financial Group | Falcon Metals vs. Centaurus Metals |
| Westpac Banking vs. Rare Foods Australia | Westpac Banking vs. Pinnacle Investment Management | Westpac Banking vs. Pure Foods Tasmania | Westpac Banking vs. Alternative Investment Trust |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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