Correlation Between MotorCycle Holdings and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both MotorCycle Holdings 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 MotorCycle Holdings and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MotorCycle Holdings and Westpac Banking, you can compare the effects of market volatilities on MotorCycle Holdings 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 MotorCycle Holdings with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of MotorCycle Holdings and Westpac Banking.
Diversification Opportunities for MotorCycle Holdings and Westpac Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MotorCycle and Westpac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MotorCycle Holdings and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and MotorCycle Holdings 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 MotorCycle Holdings 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 MotorCycle Holdings i.e., MotorCycle Holdings and Westpac Banking go up and down completely randomly.
Pair Corralation between MotorCycle Holdings and Westpac Banking
Assuming the 90 days trading horizon MotorCycle Holdings is expected to generate 23.91 times more return on investment than Westpac Banking. However, MotorCycle Holdings is 23.91 times more volatile than Westpac Banking. It trades about 0.01 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.07 per unit of risk. If you would invest 199.00 in MotorCycle Holdings on September 3, 2024 and sell it today you would lose (14.00) from holding MotorCycle Holdings or give up 7.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MotorCycle Holdings vs. Westpac Banking
Performance |
| Timeline |
| MotorCycle Holdings |
| Westpac Banking |
MotorCycle Holdings and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MotorCycle Holdings and Westpac Banking
The main advantage of trading using opposite MotorCycle Holdings and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MotorCycle Holdings 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.| MotorCycle Holdings vs. Westpac Banking | MotorCycle Holdings vs. Champion Iron | MotorCycle Holdings vs. iShares Global Healthcare | MotorCycle Holdings vs. Peel Mining |
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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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