Correlation Between Westpac Banking and Dug Technology
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Dug Technology 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 Westpac Banking and Dug Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking Corp and Dug Technology, you can compare the effects of market volatilities on Westpac Banking and Dug Technology 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 Westpac Banking with a short position of Dug Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Dug Technology.
Diversification Opportunities for Westpac Banking and Dug Technology
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westpac and Dug is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking Corp and Dug Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dug Technology and Westpac Banking 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 Westpac Banking Corp are associated (or correlated) with Dug Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dug Technology has no effect on the direction of Westpac Banking i.e., Westpac Banking and Dug Technology go up and down completely randomly.
Pair Corralation between Westpac Banking and Dug Technology
Assuming the 90 days trading horizon Westpac Banking Corp is expected to generate 0.35 times more return on investment than Dug Technology. However, Westpac Banking Corp is 2.85 times less risky than Dug Technology. It trades about 0.3 of its potential returns per unit of risk. Dug Technology is currently generating about -0.39 per unit of risk. If you would invest 3,140 in Westpac Banking Corp on August 28, 2024 and sell it today you would earn a total of 201.00 from holding Westpac Banking Corp or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking Corp vs. Dug Technology
Performance |
| Timeline |
| Westpac Banking Corp |
| Dug Technology |
Westpac Banking and Dug Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Dug Technology
The main advantage of trading using opposite Westpac Banking and Dug Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Dug Technology 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 Dug Technology will offset losses from the drop in Dug Technology's long position.| Westpac Banking vs. Lendlease Group | Westpac Banking vs. Macquarie Bank Limited | Westpac Banking vs. Insignia Financial | Westpac Banking vs. Finexia Financial Group |
| Dug Technology vs. Vulcan Steel | Dug Technology vs. Queste Communications | Dug Technology vs. Aristocrat Leisure | Dug Technology vs. Viva Leisure |
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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