Correlation Between Midway and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Midway 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 Midway and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midway and Westpac Banking, you can compare the effects of market volatilities on Midway 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 Midway with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midway and Westpac Banking.
Diversification Opportunities for Midway and Westpac Banking
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Midway and Westpac is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Midway and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Midway 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 Midway 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 Midway i.e., Midway and Westpac Banking go up and down completely randomly.
Pair Corralation between Midway and Westpac Banking
Assuming the 90 days trading horizon Midway is expected to generate 44.08 times more return on investment than Westpac Banking. However, Midway is 44.08 times more volatile than Westpac Banking. It trades about 0.2 of its potential returns per unit of risk. Westpac Banking is currently generating about -0.01 per unit of risk. If you would invest 80.00 in Midway on September 1, 2024 and sell it today you would earn a total of 45.00 from holding Midway or generate 56.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Midway vs. Westpac Banking
Performance |
| Timeline |
| Midway |
| Westpac Banking |
Midway and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midway and Westpac Banking
The main advantage of trading using opposite Midway and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midway 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.| Midway vs. Hudson Investment Group | Midway vs. EMvision Medical Devices | Midway vs. REGAL ASIAN INVESTMENTS | Midway vs. Carlton Investments |
| Westpac Banking vs. Seven West Media | Westpac Banking vs. Autosports Group | Westpac Banking vs. Cleanaway Waste Management | Westpac Banking vs. Saferoads Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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