Correlation Between Westpac Banking and Carnegie Clean
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Carnegie Clean 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 Carnegie Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Carnegie Clean Energy, you can compare the effects of market volatilities on Westpac Banking and Carnegie Clean 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 Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Carnegie Clean.
Diversification Opportunities for Westpac Banking and Carnegie Clean
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Westpac and Carnegie is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean 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 Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Westpac Banking i.e., Westpac Banking and Carnegie Clean go up and down completely randomly.
Pair Corralation between Westpac Banking and Carnegie Clean
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.14 times more return on investment than Carnegie Clean. However, Westpac Banking is 7.31 times less risky than Carnegie Clean. It trades about 0.01 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about -0.05 per unit of risk. If you would invest 10,608 in Westpac Banking on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Westpac Banking or generate 0.11% 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. Carnegie Clean Energy
Performance |
| Timeline |
| Westpac Banking |
| Carnegie Clean Energy |
Westpac Banking and Carnegie Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Carnegie Clean
The main advantage of trading using opposite Westpac Banking and Carnegie Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Carnegie Clean 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 Carnegie Clean will offset losses from the drop in Carnegie Clean's long position.| Westpac Banking vs. Premier Investments | Westpac Banking vs. REGAL ASIAN INVESTMENTS | Westpac Banking vs. MFF Capital Investments | Westpac Banking vs. Dexus Convenience Retail |
| Carnegie Clean vs. Macquarie Group | Carnegie Clean vs. Rio Tinto | Carnegie Clean vs. CSL | Carnegie Clean vs. Commonwealth Bank of |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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