Correlation Between Westpac Banking and Challenger
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Challenger 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 Challenger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Challenger, you can compare the effects of market volatilities on Westpac Banking and Challenger 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 Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Challenger.
Diversification Opportunities for Westpac Banking and Challenger
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and Challenger is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger 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 Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Westpac Banking i.e., Westpac Banking and Challenger go up and down completely randomly.
Pair Corralation between Westpac Banking and Challenger
If you would invest 605.00 in Challenger on October 28, 2024 and sell it today you would earn a total of 18.00 from holding Challenger or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Challenger
Performance |
| Timeline |
| Westpac Banking |
| Challenger |
Westpac Banking and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Challenger
The main advantage of trading using opposite Westpac Banking and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.| Westpac Banking vs. Duxton Broadacre Farms | Westpac Banking vs. Ainsworth Game Technology | Westpac Banking vs. Austco Healthcare | Westpac Banking vs. Ramsay Health Care |
| Challenger vs. Charter Hall Retail | Challenger vs. Balkan Mining and | Challenger vs. Duketon Mining | Challenger vs. Aspire 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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