Correlation Between Westpac Banking and Pointsbet Holdings
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Pointsbet Holdings 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 Pointsbet Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Pointsbet Holdings, you can compare the effects of market volatilities on Westpac Banking and Pointsbet Holdings 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 Pointsbet Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Pointsbet Holdings.
Diversification Opportunities for Westpac Banking and Pointsbet Holdings
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westpac and Pointsbet is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Pointsbet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pointsbet Holdings 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 Pointsbet Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pointsbet Holdings has no effect on the direction of Westpac Banking i.e., Westpac Banking and Pointsbet Holdings go up and down completely randomly.
Pair Corralation between Westpac Banking and Pointsbet Holdings
Assuming the 90 days trading horizon Westpac Banking is expected to under-perform the Pointsbet Holdings. But the preferred stock apears to be less risky and, when comparing its historical volatility, Westpac Banking is 6.48 times less risky than Pointsbet Holdings. The preferred stock trades about -0.11 of its potential returns per unit of risk. The Pointsbet Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 93.00 in Pointsbet Holdings on September 14, 2024 and sell it today you would earn a total of 3.00 from holding Pointsbet Holdings or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Westpac Banking vs. Pointsbet Holdings
Performance |
| Timeline |
| Westpac Banking |
| Pointsbet Holdings |
Westpac Banking and Pointsbet Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Pointsbet Holdings
The main advantage of trading using opposite Westpac Banking and Pointsbet Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Pointsbet Holdings 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 Pointsbet Holdings will offset losses from the drop in Pointsbet Holdings' long position.| Westpac Banking vs. Pointsbet Holdings | Westpac Banking vs. De Grey Mining | Westpac Banking vs. Telix Pharmaceuticals | Westpac Banking vs. Sims |
| Pointsbet Holdings vs. Iron Road | Pointsbet Holdings vs. Aeris Environmental | Pointsbet Holdings vs. Red Hill Iron | Pointsbet Holdings vs. Mount Gibson Iron |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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