Correlation Between Wam Capital and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Wam Capital 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 Wam Capital and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wam Capital and Westpac Banking, you can compare the effects of market volatilities on Wam Capital 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 Wam Capital with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wam Capital and Westpac Banking.
Diversification Opportunities for Wam Capital and Westpac Banking
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wam and Westpac is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Wam Capital and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Wam Capital 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 Wam Capital 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 Wam Capital i.e., Wam Capital and Westpac Banking go up and down completely randomly.
Pair Corralation between Wam Capital and Westpac Banking
Assuming the 90 days trading horizon Wam Capital is expected to generate 2.52 times more return on investment than Westpac Banking. However, Wam Capital is 2.52 times more volatile than Westpac Banking. It trades about 0.08 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.06 per unit of risk. If you would invest 138.00 in Wam Capital on November 1, 2024 and sell it today you would earn a total of 22.00 from holding Wam Capital or generate 15.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Wam Capital vs. Westpac Banking
Performance |
| Timeline |
| Wam Capital |
| Westpac Banking |
Wam Capital and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wam Capital and Westpac Banking
The main advantage of trading using opposite Wam Capital and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wam Capital 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.| Wam Capital vs. Infomedia | Wam Capital vs. EROAD | Wam Capital vs. COAST ENTERTAINMENT HOLDINGS | Wam Capital vs. Truscott Mining Corp |
| Westpac Banking vs. Ora Banda Mining | Westpac Banking vs. Talisman Mining | Westpac Banking vs. Collins Foods | Westpac Banking vs. Globe Metals Mining |
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 CEOs Directory module to screen CEOs from public companies around the world.
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