Correlation Between Westpac Banking and Midway
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Midway 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 Midway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Midway, you can compare the effects of market volatilities on Westpac Banking and Midway 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 Midway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Midway.
Diversification Opportunities for Westpac Banking and Midway
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westpac and Midway is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Midway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midway 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 Midway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midway has no effect on the direction of Westpac Banking i.e., Westpac Banking and Midway go up and down completely randomly.
Pair Corralation between Westpac Banking and Midway
Assuming the 90 days trading horizon Westpac Banking is expected to under-perform the Midway. But the preferred stock apears to be less risky and, when comparing its historical volatility, Westpac Banking is 30.17 times less risky than Midway. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Midway is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 80.00 in Midway on September 2, 2024 and sell it today you would earn a total of 45.00 from holding Midway or generate 56.25% 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. Midway
Performance |
| Timeline |
| Westpac Banking |
| Midway |
Westpac Banking and Midway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Midway
The main advantage of trading using opposite Westpac Banking and Midway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Midway 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 Midway will offset losses from the drop in Midway's long position.| Westpac Banking vs. Imricor Medical Systems | Westpac Banking vs. Midway | Westpac Banking vs. Betmakers Technology Group | Westpac Banking vs. SportsHero |
| Midway vs. Northern Star Resources | Midway vs. Evolution Mining | Midway vs. Bluescope Steel | Midway vs. Sandfire Resources NL |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |