Correlation Between Westpac Banking and IXUP
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and IXUP 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 IXUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and IXUP, you can compare the effects of market volatilities on Westpac Banking and IXUP 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 IXUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and IXUP.
Diversification Opportunities for Westpac Banking and IXUP
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and IXUP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and IXUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IXUP 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 IXUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IXUP has no effect on the direction of Westpac Banking i.e., Westpac Banking and IXUP go up and down completely randomly.
Pair Corralation between Westpac Banking and IXUP
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.01 times more return on investment than IXUP. However, Westpac Banking is 66.87 times less risky than IXUP. It trades about 0.07 of its potential returns per unit of risk. IXUP is currently generating about -0.02 per unit of risk. If you would invest 9,862 in Westpac Banking on August 29, 2024 and sell it today you would earn a total of 170.00 from holding Westpac Banking or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.53% |
| Values | Daily Returns |
Westpac Banking vs. IXUP
Performance |
| Timeline |
| Westpac Banking |
| IXUP |
Westpac Banking and IXUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and IXUP
The main advantage of trading using opposite Westpac Banking and IXUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, IXUP 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 IXUP will offset losses from the drop in IXUP's long position.| Westpac Banking vs. Advanced Braking Technology | Westpac Banking vs. Talisman Mining | Westpac Banking vs. Regal Funds Management | Westpac Banking 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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