Correlation Between IXUP and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both IXUP 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 IXUP and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IXUP and Westpac Banking Corp, you can compare the effects of market volatilities on IXUP 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 IXUP with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of IXUP and Westpac Banking.
Diversification Opportunities for IXUP and Westpac Banking
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IXUP and Westpac is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding IXUP 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 IXUP 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 IXUP 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 IXUP i.e., IXUP and Westpac Banking go up and down completely randomly.
Pair Corralation between IXUP and Westpac Banking
Assuming the 90 days trading horizon IXUP is expected to under-perform the Westpac Banking. In addition to that, IXUP is 33.23 times more volatile than Westpac Banking Corp. It trades about -0.02 of its total potential returns per unit of risk. Westpac Banking Corp is currently generating about -0.24 per unit of volatility. If you would invest 10,359 in Westpac Banking Corp on September 4, 2024 and sell it today you would lose (114.00) from holding Westpac Banking Corp or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IXUP vs. Westpac Banking Corp
Performance |
| Timeline |
| IXUP |
| Westpac Banking Corp |
IXUP and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IXUP and Westpac Banking
The main advantage of trading using opposite IXUP and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IXUP 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.| IXUP vs. Aneka Tambang Tbk | IXUP vs. National Australia Bank | IXUP vs. Commonwealth Bank of | IXUP vs. Commonwealth Bank of |
| Westpac Banking vs. The Environmental Group | Westpac Banking vs. G8 Education | Westpac Banking vs. Aurelia Metals | Westpac Banking vs. Legacy Iron Ore |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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