Correlation Between M3 Mining and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both M3 Mining 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 M3 Mining and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Mining and Westpac Banking Corp, you can compare the effects of market volatilities on M3 Mining 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 M3 Mining with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and Westpac Banking.
Diversification Opportunities for M3 Mining and Westpac Banking
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between M3M and Westpac is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining 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 M3 Mining 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 M3 Mining 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 M3 Mining i.e., M3 Mining and Westpac Banking go up and down completely randomly.
Pair Corralation between M3 Mining and Westpac Banking
Assuming the 90 days trading horizon M3 Mining is expected to under-perform the Westpac Banking. In addition to that, M3 Mining is 5.04 times more volatile than Westpac Banking Corp. It trades about -0.1 of its total potential returns per unit of risk. Westpac Banking Corp is currently generating about 0.27 per unit of volatility. If you would invest 3,164 in Westpac Banking Corp on September 5, 2024 and sell it today you would earn a total of 197.00 from holding Westpac Banking Corp or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
M3 Mining vs. Westpac Banking Corp
Performance |
| Timeline |
| M3 Mining |
| Westpac Banking Corp |
M3 Mining and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Mining and Westpac Banking
The main advantage of trading using opposite M3 Mining and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining 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.| M3 Mining vs. Northern Star Resources | M3 Mining vs. Evolution Mining | M3 Mining vs. Bluescope Steel | M3 Mining vs. Sandfire Resources NL |
| Westpac Banking vs. Truscott Mining Corp | Westpac Banking vs. Evolution Mining | Westpac Banking vs. Mount Gibson Iron | Westpac Banking vs. M3 Mining |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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