Correlation Between Westpac Banking and Global Data
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Global Data 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 Global Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Global Data Centre, you can compare the effects of market volatilities on Westpac Banking and Global Data 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 Global Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Global Data.
Diversification Opportunities for Westpac Banking and Global Data
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Global Data Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Data Centre 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 Global Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Data Centre has no effect on the direction of Westpac Banking i.e., Westpac Banking and Global Data go up and down completely randomly.
Pair Corralation between Westpac Banking and Global Data
Assuming the 90 days trading horizon Westpac Banking is expected to generate 18.58 times less return on investment than Global Data. But when comparing it to its historical volatility, Westpac Banking is 20.04 times less risky than Global Data. It trades about 0.05 of its potential returns per unit of risk. Global Data Centre is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 81.00 in Global Data Centre on September 12, 2024 and sell it today you would earn a total of 62.00 from holding Global Data Centre or generate 76.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Global Data Centre
Performance |
| Timeline |
| Westpac Banking |
| Global Data Centre |
Westpac Banking and Global Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Global Data
The main advantage of trading using opposite Westpac Banking and Global Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Global Data 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 Global Data will offset losses from the drop in Global Data's long position.| Westpac Banking vs. Aeon Metals | Westpac Banking vs. Ironbark Capital | Westpac Banking vs. Red Hill Iron | Westpac Banking vs. Hawsons Iron |
| Global Data vs. Perseus Mining | Global Data vs. K2 Asset Management | Global Data vs. Alto Metals | Global Data vs. Argo Investments |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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