Correlation Between Westpac Banking and Black Rock
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Black Rock 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 Black Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Black Rock Mining, you can compare the effects of market volatilities on Westpac Banking and Black Rock 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 Black Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Black Rock.
Diversification Opportunities for Westpac Banking and Black Rock
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westpac and Black is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Black Rock Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Rock Mining 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 Black Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Rock Mining has no effect on the direction of Westpac Banking i.e., Westpac Banking and Black Rock go up and down completely randomly.
Pair Corralation between Westpac Banking and Black Rock
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.08 times more return on investment than Black Rock. However, Westpac Banking is 12.33 times less risky than Black Rock. It trades about 0.01 of its potential returns per unit of risk. Black Rock Mining is currently generating about -0.17 per unit of risk. If you would invest 10,570 in Westpac Banking on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Westpac Banking or generate 0.15% 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. Black Rock Mining
Performance |
| Timeline |
| Westpac Banking |
| Black Rock Mining |
Westpac Banking and Black Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Black Rock
The main advantage of trading using opposite Westpac Banking and Black Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Black Rock 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 Black Rock will offset losses from the drop in Black Rock's long position.| Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Alternative Investment Trust | Westpac Banking vs. BlackWall Property Funds | Westpac Banking vs. Clime Investment Management |
| Black Rock vs. Qbe Insurance Group | Black Rock vs. Wt Financial Group | Black Rock vs. MA Financial Group | Black Rock vs. Westpac Banking |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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