Correlation Between Westpac Banking and IShares Global
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and IShares Global 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 IShares Global 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 iShares Global Healthcare, you can compare the effects of market volatilities on Westpac Banking and IShares Global 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 IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and IShares Global.
Diversification Opportunities for Westpac Banking and IShares Global
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westpac and IShares is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking Corp and iShares Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Healthcare 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Healthcare has no effect on the direction of Westpac Banking i.e., Westpac Banking and IShares Global go up and down completely randomly.
Pair Corralation between Westpac Banking and IShares Global
Assuming the 90 days trading horizon Westpac Banking Corp is expected to under-perform the IShares Global. But the preferred stock apears to be less risky and, when comparing its historical volatility, Westpac Banking Corp is 4.38 times less risky than IShares Global. The preferred stock trades about -0.24 of its potential returns per unit of risk. The iShares Global Healthcare is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 14,154 in iShares Global Healthcare on September 4, 2024 and sell it today you would lose (68.00) from holding iShares Global Healthcare or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking Corp vs. iShares Global Healthcare
Performance |
| Timeline |
| Westpac Banking Corp |
| iShares Global Healthcare |
Westpac Banking and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and IShares Global
The main advantage of trading using opposite Westpac Banking and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, IShares Global 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 IShares Global will offset losses from the drop in IShares Global's long position.| Westpac Banking vs. The Environmental Group | Westpac Banking vs. G8 Education | Westpac Banking vs. Aurelia Metals | Westpac Banking vs. Legacy Iron Ore |
| IShares Global vs. iShares MSCI Emerging | IShares Global vs. iShares Global Aggregate | IShares Global vs. iShares CoreSP MidCap | IShares Global vs. iShares SP 500 |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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