Correlation Between Westpac Banking and BNK BankingLtd
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and BNK BankingLtd 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 BNK BankingLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and BNK Banking, you can compare the effects of market volatilities on Westpac Banking and BNK BankingLtd 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 BNK BankingLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and BNK BankingLtd.
Diversification Opportunities for Westpac Banking and BNK BankingLtd
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and BNK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and BNK Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK BankingLtd 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 are associated (or correlated) with BNK BankingLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK BankingLtd has no effect on the direction of Westpac Banking i.e., Westpac Banking and BNK BankingLtd go up and down completely randomly.
Pair Corralation between Westpac Banking and BNK BankingLtd
If you would invest 10,032 in Westpac Banking on November 9, 2024 and sell it today you would earn a total of 0.00 from holding Westpac Banking or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. BNK Banking
Performance |
| Timeline |
| Westpac Banking |
| BNK BankingLtd |
Westpac Banking and BNK BankingLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and BNK BankingLtd
The main advantage of trading using opposite Westpac Banking and BNK BankingLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, BNK BankingLtd 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 BNK BankingLtd will offset losses from the drop in BNK BankingLtd's long position.| Westpac Banking vs. Centaurus Metals | Westpac Banking vs. Truscott Mining Corp | Westpac Banking vs. Bell Financial Group | Westpac Banking vs. Bank of Queensland |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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