Correlation Between Queste Communications and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Queste Communications 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 Queste Communications and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Queste Communications and Westpac Banking, you can compare the effects of market volatilities on Queste Communications 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 Queste Communications with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Queste Communications and Westpac Banking.
Diversification Opportunities for Queste Communications and Westpac Banking
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Queste and Westpac is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Queste Communications and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Queste Communications 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 Queste Communications 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 Queste Communications i.e., Queste Communications and Westpac Banking go up and down completely randomly.
Pair Corralation between Queste Communications and Westpac Banking
Assuming the 90 days trading horizon Queste Communications is expected to under-perform the Westpac Banking. But the stock apears to be less risky and, when comparing its historical volatility, Queste Communications is 2.15 times less risky than Westpac Banking. The stock trades about -0.09 of its potential returns per unit of risk. The Westpac Banking is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 10,082 in Westpac Banking on August 30, 2024 and sell it today you would earn a total of 580.00 from holding Westpac Banking or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Queste Communications vs. Westpac Banking
Performance |
| Timeline |
| Queste Communications |
| Westpac Banking |
Queste Communications and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Queste Communications and Westpac Banking
The main advantage of trading using opposite Queste Communications and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Queste Communications 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.| Queste Communications vs. Aussie Broadband | Queste Communications vs. Black Rock Mining | Queste Communications vs. Aurelia Metals | Queste Communications vs. Nufarm Finance NZ |
| Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Alternative Investment Trust | Westpac Banking vs. BlackWall Property Funds | Westpac Banking vs. Clime Investment Management |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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