Correlation Between Westpac Banking and Chalice Mining
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Chalice Mining 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 Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Chalice Mining Limited, you can compare the effects of market volatilities on Westpac Banking and Chalice Mining 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 Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Chalice Mining.
Diversification Opportunities for Westpac Banking and Chalice Mining
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westpac and Chalice is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice 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 Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of Westpac Banking i.e., Westpac Banking and Chalice Mining go up and down completely randomly.
Pair Corralation between Westpac Banking and Chalice Mining
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.06 times more return on investment than Chalice Mining. However, Westpac Banking is 15.78 times less risky than Chalice Mining. It trades about 0.1 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about -0.01 per unit of risk. If you would invest 9,654 in Westpac Banking on September 20, 2024 and sell it today you would earn a total of 833.00 from holding Westpac Banking or generate 8.63% 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. Chalice Mining Limited
Performance |
| Timeline |
| Westpac Banking |
| Chalice Mining |
Westpac Banking and Chalice Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Chalice Mining
The main advantage of trading using opposite Westpac Banking and Chalice Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Chalice Mining 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 Chalice Mining will offset losses from the drop in Chalice Mining's long position.| Westpac Banking vs. Westpac Banking | Westpac Banking vs. De Grey Mining | Westpac Banking vs. Pointsbet Holdings | Westpac Banking vs. Indiana Resources |
| Chalice Mining vs. Pinnacle Investment Management | Chalice Mining vs. Collins Foods | Chalice Mining vs. Bailador Technology Invest | Chalice Mining vs. Sandon Capital Investments |
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 CEOs Directory module to screen CEOs from public companies around the world.
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