Correlation Between Westpac Banking and Pro Medicus
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Pro Medicus 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 Pro Medicus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Pro Medicus, you can compare the effects of market volatilities on Westpac Banking and Pro Medicus 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 Pro Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Pro Medicus.
Diversification Opportunities for Westpac Banking and Pro Medicus
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and Pro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Pro Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Medicus 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 Pro Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Medicus has no effect on the direction of Westpac Banking i.e., Westpac Banking and Pro Medicus go up and down completely randomly.
Pair Corralation between Westpac Banking and Pro Medicus
Assuming the 90 days trading horizon Westpac Banking is expected to generate 39.59 times less return on investment than Pro Medicus. But when comparing it to its historical volatility, Westpac Banking is 15.38 times less risky than Pro Medicus. It trades about 0.08 of its potential returns per unit of risk. Pro Medicus is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 8,136 in Pro Medicus on September 1, 2024 and sell it today you would earn a total of 17,053 from holding Pro Medicus or generate 209.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Westpac Banking vs. Pro Medicus
Performance |
| Timeline |
| Westpac Banking |
| Pro Medicus |
Westpac Banking and Pro Medicus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Pro Medicus
The main advantage of trading using opposite Westpac Banking and Pro Medicus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Pro Medicus 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 Pro Medicus will offset losses from the drop in Pro Medicus' long position.| Westpac Banking vs. Macquarie Group | Westpac Banking vs. Rio Tinto | Westpac Banking vs. CSL | Westpac Banking vs. Commonwealth Bank of |
| Pro Medicus vs. Hutchison Telecommunications | Pro Medicus vs. Health and Plant | Pro Medicus vs. TPG Telecom | Pro Medicus vs. Ramsay Health Care |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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