Correlation Between Indiana Resources and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Indiana 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 Indiana 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 Indiana Resources and Westpac Banking, you can compare the effects of market volatilities on Indiana 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 Indiana Resources with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indiana Resources and Westpac Banking.
Diversification Opportunities for Indiana Resources and Westpac Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indiana and Westpac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indiana Resources and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Indiana 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 Indiana 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 Indiana Resources i.e., Indiana Resources and Westpac Banking go up and down completely randomly.
Pair Corralation between Indiana Resources and Westpac Banking
Assuming the 90 days trading horizon Indiana Resources is expected to generate 8.22 times more return on investment than Westpac Banking. However, Indiana Resources is 8.22 times more volatile than Westpac Banking. It trades about 0.08 of its potential returns per unit of risk. Westpac Banking is currently generating about -0.11 per unit of risk. If you would invest 5.73 in Indiana Resources on September 18, 2024 and sell it today you would earn a total of 0.27 from holding Indiana Resources or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Indiana Resources vs. Westpac Banking
Performance |
| Timeline |
| Indiana Resources |
| Westpac Banking |
Indiana Resources and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indiana Resources and Westpac Banking
The main advantage of trading using opposite Indiana Resources and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indiana 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.| Indiana Resources vs. Northern Star Resources | Indiana Resources vs. Evolution Mining | Indiana Resources vs. Bluescope Steel | Indiana Resources vs. Sandfire Resources NL |
| Westpac Banking vs. Westpac Banking | Westpac Banking vs. De Grey Mining | Westpac Banking vs. Pointsbet Holdings | Westpac Banking vs. Indiana Resources |
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.
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