Correlation Between Westpac Banking and Credit Corp
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Credit Corp 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 Credit Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Credit Corp Group, you can compare the effects of market volatilities on Westpac Banking and Credit Corp 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 Credit Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Credit Corp.
Diversification Opportunities for Westpac Banking and Credit Corp
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westpac and Credit is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Credit Corp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Corp 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 Credit Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Corp Group has no effect on the direction of Westpac Banking i.e., Westpac Banking and Credit Corp go up and down completely randomly.
Pair Corralation between Westpac Banking and Credit Corp
Assuming the 90 days trading horizon Westpac Banking is expected to generate 1.24 times less return on investment than Credit Corp. But when comparing it to its historical volatility, Westpac Banking is 9.03 times less risky than Credit Corp. It trades about 0.08 of its potential returns per unit of risk. Credit Corp Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,653 in Credit Corp Group on November 28, 2024 and sell it today you would lose (75.00) from holding Credit Corp Group or give up 4.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Westpac Banking vs. Credit Corp Group
Performance |
| Timeline |
| Westpac Banking |
| Credit Corp Group |
Westpac Banking and Credit Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Credit Corp
The main advantage of trading using opposite Westpac Banking and Credit Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Credit Corp 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 Credit Corp will offset losses from the drop in Credit Corp's long position.| Westpac Banking vs. Australian Agricultural | Westpac Banking vs. Centaurus Metals | Westpac Banking vs. Polymetals Resources | Westpac Banking vs. MA Financial Group |
| Credit Corp vs. Westpac Banking | Credit Corp vs. TPG Telecom | Credit Corp vs. Computershare | Credit Corp vs. Treasury Wine Estates |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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