Correlation Between Westpac Banking and REGAL ASIAN
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and REGAL ASIAN 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 REGAL ASIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on Westpac Banking and REGAL ASIAN 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 REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and REGAL ASIAN.
Diversification Opportunities for Westpac Banking and REGAL ASIAN
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Westpac and REGAL is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS 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 REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of Westpac Banking i.e., Westpac Banking and REGAL ASIAN go up and down completely randomly.
Pair Corralation between Westpac Banking and REGAL ASIAN
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.2 times more return on investment than REGAL ASIAN. However, Westpac Banking is 4.89 times less risky than REGAL ASIAN. It trades about 0.02 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about -0.02 per unit of risk. If you would invest 10,420 in Westpac Banking on August 28, 2024 and sell it today you would earn a total of 14.00 from holding Westpac Banking or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. REGAL ASIAN INVESTMENTS
Performance |
| Timeline |
| Westpac Banking |
| REGAL ASIAN INVESTMENTS |
Westpac Banking and REGAL ASIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and REGAL ASIAN
The main advantage of trading using opposite Westpac Banking and REGAL ASIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, REGAL ASIAN 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 REGAL ASIAN will offset losses from the drop in REGAL ASIAN's long position.| Westpac Banking vs. ABACUS STORAGE KING | Westpac Banking vs. Odyssey Energy | Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Origin Energy |
| REGAL ASIAN vs. ABACUS STORAGE KING | REGAL ASIAN vs. Odyssey Energy | REGAL ASIAN vs. Hotel Property Investments | REGAL ASIAN vs. Origin Energy |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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