Correlation Between Westpac Banking and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Champion Iron 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 Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Champion Iron, you can compare the effects of market volatilities on Westpac Banking and Champion Iron 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 Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Champion Iron.
Diversification Opportunities for Westpac Banking and Champion Iron
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and Champion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron 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 Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Westpac Banking i.e., Westpac Banking and Champion Iron go up and down completely randomly.
Pair Corralation between Westpac Banking and Champion Iron
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.06 times more return on investment than Champion Iron. However, Westpac Banking is 16.78 times less risky than Champion Iron. It trades about 0.08 of its potential returns per unit of risk. Champion Iron is currently generating about -0.03 per unit of risk. If you would invest 9,736 in Westpac Banking on September 1, 2024 and sell it today you would earn a total of 296.00 from holding Westpac Banking or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Champion Iron
Performance |
| Timeline |
| Westpac Banking |
| Champion Iron |
Westpac Banking and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Champion Iron
The main advantage of trading using opposite Westpac Banking and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| Westpac Banking vs. Macquarie Group | Westpac Banking vs. Rio Tinto | Westpac Banking vs. CSL | Westpac Banking vs. Commonwealth Bank of |
| Champion Iron vs. Dicker Data | Champion Iron vs. Data3 | Champion Iron vs. Retail Food Group | Champion Iron vs. Charter Hall Retail |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |