Correlation Between Flagship Investments and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Flagship Investments 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 Flagship Investments and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flagship Investments and Westpac Banking Corp, you can compare the effects of market volatilities on Flagship Investments 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 Flagship Investments with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Westpac Banking.
Diversification Opportunities for Flagship Investments and Westpac Banking
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flagship and Westpac is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments 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 Flagship Investments 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 Flagship Investments 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 Flagship Investments i.e., Flagship Investments and Westpac Banking go up and down completely randomly.
Pair Corralation between Flagship Investments and Westpac Banking
Assuming the 90 days trading horizon Flagship Investments is expected to generate 1.27 times more return on investment than Westpac Banking. However, Flagship Investments is 1.27 times more volatile than Westpac Banking Corp. It trades about 0.26 of its potential returns per unit of risk. Westpac Banking Corp is currently generating about 0.29 per unit of risk. If you would invest 200.00 in Flagship Investments on September 2, 2024 and sell it today you would earn a total of 15.00 from holding Flagship Investments or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flagship Investments vs. Westpac Banking Corp
Performance |
| Timeline |
| Flagship Investments |
| Westpac Banking Corp |
Flagship Investments and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flagship Investments and Westpac Banking
The main advantage of trading using opposite Flagship Investments and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments 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.| Flagship Investments vs. Lendlease Group | Flagship Investments vs. Hutchison Telecommunications | Flagship Investments vs. BSP Financial Group | Flagship Investments vs. National Australia Bank |
| Westpac Banking vs. Sandon Capital Investments | Westpac Banking vs. Flagship Investments | Westpac Banking vs. Regal Investment | Westpac Banking vs. Ras Technology Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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