Correlation Between Microequities Asset and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Microequities Asset 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 Microequities Asset and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microequities Asset Management and Westpac Banking, you can compare the effects of market volatilities on Microequities Asset 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 Microequities Asset with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microequities Asset and Westpac Banking.
Diversification Opportunities for Microequities Asset and Westpac Banking
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microequities and Westpac is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microequities Asset Management and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Microequities Asset 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 Microequities Asset Management 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 Microequities Asset i.e., Microequities Asset and Westpac Banking go up and down completely randomly.
Pair Corralation between Microequities Asset and Westpac Banking
Assuming the 90 days trading horizon Microequities Asset Management is expected to under-perform the Westpac Banking. In addition to that, Microequities Asset is 6.8 times more volatile than Westpac Banking. It trades about -0.02 of its total potential returns per unit of risk. Westpac Banking is currently generating about 0.1 per unit of volatility. If you would invest 10,082 in Westpac Banking on August 29, 2024 and sell it today you would earn a total of 504.00 from holding Westpac Banking or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microequities Asset Management vs. Westpac Banking
Performance |
| Timeline |
| Microequities Asset |
| Westpac Banking |
Microequities Asset and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microequities Asset and Westpac Banking
The main advantage of trading using opposite Microequities Asset and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microequities Asset 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.| Microequities Asset vs. Champion Iron | Microequities Asset vs. Ridley | Microequities Asset vs. Peel Mining | Microequities Asset vs. Australian Dairy Farms |
| Westpac Banking vs. Champion Iron | Westpac Banking vs. Ridley | Westpac Banking vs. Australian Dairy Farms | Westpac Banking vs. Perpetual Credit Income |
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 CEOs Directory module to screen CEOs from public companies around the world.
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