Correlation Between Westpac Banking and Perpetual Credit
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Perpetual Credit 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 Perpetual Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Perpetual Credit Income, you can compare the effects of market volatilities on Westpac Banking and Perpetual Credit 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 Perpetual Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Perpetual Credit.
Diversification Opportunities for Westpac Banking and Perpetual Credit
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westpac and Perpetual is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Perpetual Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetual Credit Income 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 Perpetual Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetual Credit Income has no effect on the direction of Westpac Banking i.e., Westpac Banking and Perpetual Credit go up and down completely randomly.
Pair Corralation between Westpac Banking and Perpetual Credit
Assuming the 90 days trading horizon Westpac Banking is expected to under-perform the Perpetual Credit. But the preferred stock apears to be less risky and, when comparing its historical volatility, Westpac Banking is 2.89 times less risky than Perpetual Credit. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Perpetual Credit Income is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 115.00 in Perpetual Credit Income on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Perpetual Credit Income or generate 0.87% 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. Perpetual Credit Income
Performance |
| Timeline |
| Westpac Banking |
| Perpetual Credit Income |
Westpac Banking and Perpetual Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Perpetual Credit
The main advantage of trading using opposite Westpac Banking and Perpetual Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Perpetual Credit 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 Perpetual Credit will offset losses from the drop in Perpetual Credit's long position.| Westpac Banking vs. Imricor Medical Systems | Westpac Banking vs. Midway | Westpac Banking vs. Betmakers Technology Group | Westpac Banking vs. SportsHero |
| Perpetual Credit vs. ABACUS STORAGE KING | Perpetual Credit vs. Midway | Perpetual Credit vs. Aristocrat Leisure | Perpetual Credit vs. Imricor Medical Systems |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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