Correlation Between Talisman Mining and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Talisman Mining 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 Talisman Mining and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talisman Mining and Westpac Banking, you can compare the effects of market volatilities on Talisman Mining 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 Talisman Mining with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talisman Mining and Westpac Banking.
Diversification Opportunities for Talisman Mining and Westpac Banking
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Talisman and Westpac is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Talisman Mining and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Talisman Mining 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 Talisman Mining 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 Talisman Mining i.e., Talisman Mining and Westpac Banking go up and down completely randomly.
Pair Corralation between Talisman Mining and Westpac Banking
Assuming the 90 days trading horizon Talisman Mining is expected to generate 10.62 times more return on investment than Westpac Banking. However, Talisman Mining is 10.62 times more volatile than Westpac Banking. It trades about 0.06 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.01 per unit of risk. If you would invest 23.00 in Talisman Mining on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Talisman Mining or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talisman Mining vs. Westpac Banking
Performance |
| Timeline |
| Talisman Mining |
| Westpac Banking |
Talisman Mining and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talisman Mining and Westpac Banking
The main advantage of trading using opposite Talisman Mining and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talisman Mining 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.| Talisman Mining vs. Readytech Holdings | Talisman Mining vs. Bisalloy Steel Group | Talisman Mining vs. WiseTech Global Limited | Talisman Mining vs. Aurelia Metals |
| Westpac Banking vs. Premier Investments | Westpac Banking vs. REGAL ASIAN INVESTMENTS | Westpac Banking vs. MFF Capital Investments | Westpac Banking vs. Dexus Convenience Retail |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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