Correlation Between Westpac Banking and Marmota Energy
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Marmota Energy 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 Marmota Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Marmota Energy, you can compare the effects of market volatilities on Westpac Banking and Marmota Energy 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 Marmota Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Marmota Energy.
Diversification Opportunities for Westpac Banking and Marmota Energy
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Westpac and Marmota is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Marmota Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marmota Energy 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 Marmota Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marmota Energy has no effect on the direction of Westpac Banking i.e., Westpac Banking and Marmota Energy go up and down completely randomly.
Pair Corralation between Westpac Banking and Marmota Energy
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.1 times more return on investment than Marmota Energy. However, Westpac Banking is 10.42 times less risky than Marmota Energy. It trades about 0.03 of its potential returns per unit of risk. Marmota Energy is currently generating about -0.01 per unit of risk. If you would invest 10,433 in Westpac Banking on September 2, 2024 and sell it today you would earn a total of 57.00 from holding Westpac Banking or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Marmota Energy
Performance |
| Timeline |
| Westpac Banking |
| Marmota Energy |
Westpac Banking and Marmota Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Marmota Energy
The main advantage of trading using opposite Westpac Banking and Marmota Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Marmota Energy 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 Marmota Energy will offset losses from the drop in Marmota Energy's long position.| Westpac Banking vs. Kneomedia | Westpac Banking vs. Alternative Investment Trust | Westpac Banking vs. Autosports Group | Westpac Banking vs. Navigator Global Investments |
| Marmota Energy vs. Westpac Banking | Marmota Energy vs. ABACUS STORAGE KING | Marmota Energy vs. Odyssey Energy | Marmota Energy vs. Midway |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |