Correlation Between Sports Entertainment and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Sports Entertainment 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 Sports Entertainment and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sports Entertainment Group and Westpac Banking, you can compare the effects of market volatilities on Sports Entertainment 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 Sports Entertainment with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Entertainment and Westpac Banking.
Diversification Opportunities for Sports Entertainment and Westpac Banking
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sports and Westpac is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sports Entertainment Group and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Sports Entertainment 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 Sports Entertainment Group 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 Sports Entertainment i.e., Sports Entertainment and Westpac Banking go up and down completely randomly.
Pair Corralation between Sports Entertainment and Westpac Banking
Assuming the 90 days trading horizon Sports Entertainment Group is expected to generate 16.07 times more return on investment than Westpac Banking. However, Sports Entertainment is 16.07 times more volatile than Westpac Banking. It trades about 0.03 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.06 per unit of risk. If you would invest 20.00 in Sports Entertainment Group on October 29, 2024 and sell it today you would earn a total of 1.00 from holding Sports Entertainment Group or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sports Entertainment Group vs. Westpac Banking
Performance |
| Timeline |
| Sports Entertainment |
| Westpac Banking |
Sports Entertainment and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sports Entertainment and Westpac Banking
The main advantage of trading using opposite Sports Entertainment and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sports Entertainment 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.| Sports Entertainment vs. Macquarie Technology Group | Sports Entertainment vs. ACDC Metals | Sports Entertainment vs. Mach7 Technologies | Sports Entertainment vs. Thorney Technologies |
| Westpac Banking vs. Medical Developments International | Westpac Banking vs. Collins Foods | Westpac Banking vs. TPG Telecom | Westpac Banking vs. Actinogen Medical |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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