Correlation Between Macquarie Bank and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Macquarie Bank 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 Macquarie Bank and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Bank Limited and Westpac Banking, you can compare the effects of market volatilities on Macquarie Bank 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 Macquarie Bank with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Westpac Banking.
Diversification Opportunities for Macquarie Bank and Westpac Banking
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macquarie and Westpac is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Limited and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Macquarie Bank 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 Macquarie Bank Limited 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 Macquarie Bank i.e., Macquarie Bank and Westpac Banking go up and down completely randomly.
Pair Corralation between Macquarie Bank and Westpac Banking
Assuming the 90 days trading horizon Macquarie Bank Limited is expected to generate 2.63 times more return on investment than Westpac Banking. However, Macquarie Bank is 2.63 times more volatile than Westpac Banking. It trades about -0.09 of its potential returns per unit of risk. Westpac Banking is currently generating about -0.32 per unit of risk. If you would invest 10,404 in Macquarie Bank Limited on August 27, 2024 and sell it today you would lose (130.00) from holding Macquarie Bank Limited or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Bank Limited vs. Westpac Banking
Performance |
| Timeline |
| Macquarie Bank |
| Westpac Banking |
Macquarie Bank and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Bank and Westpac Banking
The main advantage of trading using opposite Macquarie Bank and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Bank 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.| Macquarie Bank vs. NEWMONT PORATION CDI | Macquarie Bank vs. Ssr Mining | Macquarie Bank vs. Ora Banda Mining | Macquarie Bank vs. Black Cat Syndicate |
| Westpac Banking vs. Origin Energy | Westpac Banking vs. Insurance Australia Group | Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Ecofibre |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |