Correlation Between Westpac Banking and Wam Capital
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Wam Capital 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 Wam Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Wam Capital, you can compare the effects of market volatilities on Westpac Banking and Wam Capital 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 Wam Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Wam Capital.
Diversification Opportunities for Westpac Banking and Wam Capital
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westpac and Wam is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Wam Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Capital 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 Wam Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Capital has no effect on the direction of Westpac Banking i.e., Westpac Banking and Wam Capital go up and down completely randomly.
Pair Corralation between Westpac Banking and Wam Capital
Assuming the 90 days trading horizon Westpac Banking is expected to under-perform the Wam Capital. But the stock apears to be less risky and, when comparing its historical volatility, Westpac Banking is 2.1 times less risky than Wam Capital. The stock trades about -0.02 of its potential returns per unit of risk. The Wam Capital is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 158.00 in Wam Capital on November 8, 2024 and sell it today you would earn a total of 1.00 from holding Wam Capital or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Wam Capital
Performance |
| Timeline |
| Westpac Banking |
| Wam Capital |
Westpac Banking and Wam Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Wam Capital
The main advantage of trading using opposite Westpac Banking and Wam Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Wam Capital 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 Wam Capital will offset losses from the drop in Wam Capital's long position.| Westpac Banking vs. Aeris Environmental | Westpac Banking vs. Computershare | Westpac Banking vs. Bluescope Steel | Westpac Banking vs. Vulcan Steel |
| Wam Capital vs. Oneview Healthcare PLC | Wam Capital vs. Apiam Animal Health | Wam Capital vs. Tombador Iron | Wam Capital vs. Bisalloy Steel Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |