Correlation Between Westpac Banking and Cleanaway Waste
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Cleanaway Waste 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 Cleanaway Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Cleanaway Waste Management, you can compare the effects of market volatilities on Westpac Banking and Cleanaway Waste 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 Cleanaway Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Cleanaway Waste.
Diversification Opportunities for Westpac Banking and Cleanaway Waste
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westpac and Cleanaway is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana 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 Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of Westpac Banking i.e., Westpac Banking and Cleanaway Waste go up and down completely randomly.
Pair Corralation between Westpac Banking and Cleanaway Waste
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.4 times more return on investment than Cleanaway Waste. However, Westpac Banking is 2.52 times less risky than Cleanaway Waste. It trades about 0.07 of its potential returns per unit of risk. Cleanaway Waste Management is currently generating about 0.01 per unit of risk. If you would invest 10,434 in Westpac Banking on September 2, 2024 and sell it today you would earn a total of 211.00 from holding Westpac Banking or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Cleanaway Waste Management
Performance |
| Timeline |
| Westpac Banking |
| Cleanaway Waste Mana |
Westpac Banking and Cleanaway Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Cleanaway Waste
The main advantage of trading using opposite Westpac Banking and Cleanaway Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Cleanaway Waste 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 Cleanaway Waste will offset losses from the drop in Cleanaway Waste's long position.| Westpac Banking vs. Imricor Medical Systems | Westpac Banking vs. Midway | Westpac Banking vs. Betmakers Technology Group | Westpac Banking vs. SportsHero |
| Cleanaway Waste vs. Stelar Metals | Cleanaway Waste vs. ABACUS STORAGE KING | Cleanaway Waste vs. Treasury Wine Estates | Cleanaway Waste vs. Viva Leisure |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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