Correlation Between Westpac Banking and Rea
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Rea 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 Rea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Rea Group, you can compare the effects of market volatilities on Westpac Banking and Rea 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 Rea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Rea.
Diversification Opportunities for Westpac Banking and Rea
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and Rea is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Rea Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rea Group 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 Rea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rea Group has no effect on the direction of Westpac Banking i.e., Westpac Banking and Rea go up and down completely randomly.
Pair Corralation between Westpac Banking and Rea
If you would invest 23,305 in Rea Group on September 3, 2024 and sell it today you would earn a total of 1,848 from holding Rea Group or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Rea Group
Performance |
| Timeline |
| Westpac Banking |
| Rea Group |
Westpac Banking and Rea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Rea
The main advantage of trading using opposite Westpac Banking and Rea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Rea 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 Rea will offset losses from the drop in Rea's long position.| Westpac Banking vs. Kip McGrath Education | Westpac Banking vs. Alto Metals | Westpac Banking vs. Leeuwin Metals | Westpac Banking vs. Centaurus Metals |
| Rea vs. Westpac Banking | Rea vs. American West Metals | Rea vs. ACDC Metals | Rea vs. Perpetual Credit Income |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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