Correlation Between Sky Metals and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Sky Metals 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 Sky Metals and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and Westpac Banking Corp, you can compare the effects of market volatilities on Sky Metals 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 Sky Metals with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and Westpac Banking.
Diversification Opportunities for Sky Metals and Westpac Banking
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sky and Westpac is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and Westpac Banking Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking Corp and Sky Metals 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 Sky Metals 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 Corp has no effect on the direction of Sky Metals i.e., Sky Metals and Westpac Banking go up and down completely randomly.
Pair Corralation between Sky Metals and Westpac Banking
Assuming the 90 days trading horizon Sky Metals is expected to under-perform the Westpac Banking. In addition to that, Sky Metals is 4.01 times more volatile than Westpac Banking Corp. It trades about -0.02 of its total potential returns per unit of risk. Westpac Banking Corp is currently generating about 0.3 per unit of volatility. If you would invest 3,126 in Westpac Banking Corp on August 31, 2024 and sell it today you would earn a total of 214.00 from holding Westpac Banking Corp or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sky Metals vs. Westpac Banking Corp
Performance |
| Timeline |
| Sky Metals |
| Westpac Banking Corp |
Sky Metals and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and Westpac Banking
The main advantage of trading using opposite Sky Metals and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals 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.| Sky Metals vs. Commonwealth Bank of | Sky Metals vs. Autosports Group | Sky Metals vs. Aristocrat Leisure | Sky Metals vs. Qbe Insurance Group |
| Westpac Banking vs. Legacy Iron Ore | Westpac Banking vs. Srj Technologies Group | Westpac Banking vs. Neurotech International | Westpac Banking vs. Computershare |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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