Correlation Between Regal Funds and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Regal Funds 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 Regal Funds and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Funds Management and Westpac Banking, you can compare the effects of market volatilities on Regal Funds 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 Regal Funds with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Funds and Westpac Banking.
Diversification Opportunities for Regal Funds and Westpac Banking
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Regal and Westpac is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Regal Funds Management and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Regal Funds 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 Regal Funds 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 Regal Funds i.e., Regal Funds and Westpac Banking go up and down completely randomly.
Pair Corralation between Regal Funds and Westpac Banking
Assuming the 90 days trading horizon Regal Funds Management is expected to generate 4.5 times more return on investment than Westpac Banking. However, Regal Funds is 4.5 times more volatile than Westpac Banking. It trades about 0.24 of its potential returns per unit of risk. Westpac Banking is currently generating about -0.01 per unit of risk. If you would invest 356.00 in Regal Funds Management on September 4, 2024 and sell it today you would earn a total of 37.00 from holding Regal Funds Management or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Funds Management vs. Westpac Banking
Performance |
| Timeline |
| Regal Funds Management |
| Westpac Banking |
Regal Funds and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Funds and Westpac Banking
The main advantage of trading using opposite Regal Funds and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Funds 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.| Regal Funds vs. Westpac Banking | Regal Funds vs. Ecofibre | Regal Funds vs. Adriatic Metals Plc | Regal Funds vs. Australian Dairy Farms |
| Westpac Banking vs. Wt Financial Group | Westpac Banking vs. Legacy Iron Ore | Westpac Banking vs. EP Financial Group | Westpac Banking vs. Mount Gibson Iron |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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