Correlation Between Westpac Banking and Clime Investment
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Clime Investment 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 Clime Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Clime Investment Management, you can compare the effects of market volatilities on Westpac Banking and Clime Investment 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 Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Clime Investment.
Diversification Opportunities for Westpac Banking and Clime Investment
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westpac and Clime is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man 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 Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of Westpac Banking i.e., Westpac Banking and Clime Investment go up and down completely randomly.
Pair Corralation between Westpac Banking and Clime Investment
Assuming the 90 days trading horizon Westpac Banking is expected to generate 17.78 times less return on investment than Clime Investment. But when comparing it to its historical volatility, Westpac Banking is 6.65 times less risky than Clime Investment. It trades about 0.07 of its potential returns per unit of risk. Clime Investment Management is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Clime Investment Management on November 4, 2024 and sell it today you would earn a total of 2.00 from holding Clime Investment Management or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Clime Investment Management
Performance |
| Timeline |
| Westpac Banking |
| Clime Investment Man |
Westpac Banking and Clime Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Clime Investment
The main advantage of trading using opposite Westpac Banking and Clime Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Clime Investment 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 Clime Investment will offset losses from the drop in Clime Investment's long position.| Westpac Banking vs. Anteris Technologies | Westpac Banking vs. Hansen Technologies | Westpac Banking vs. Ras Technology Holdings | Westpac Banking vs. Dug Technology |
| Clime Investment vs. Saferoads Holdings | Clime Investment vs. MFF Capital Investments | Clime Investment vs. Alternative Investment Trust | Clime Investment vs. Pinnacle Investment Management |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |