Correlation Between Westpac Banking and Duxton Broadacre
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Duxton Broadacre 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 Duxton Broadacre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Duxton Broadacre Farms, you can compare the effects of market volatilities on Westpac Banking and Duxton Broadacre 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 Duxton Broadacre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Duxton Broadacre.
Diversification Opportunities for Westpac Banking and Duxton Broadacre
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westpac and Duxton is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Duxton Broadacre Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duxton Broadacre Farms 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 Duxton Broadacre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duxton Broadacre Farms has no effect on the direction of Westpac Banking i.e., Westpac Banking and Duxton Broadacre go up and down completely randomly.
Pair Corralation between Westpac Banking and Duxton Broadacre
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.19 times more return on investment than Duxton Broadacre. However, Westpac Banking is 5.39 times less risky than Duxton Broadacre. It trades about 0.07 of its potential returns per unit of risk. Duxton Broadacre Farms is currently generating about -0.09 per unit of risk. If you would invest 10,366 in Westpac Banking on August 29, 2024 and sell it today you would earn a total of 216.00 from holding Westpac Banking or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Duxton Broadacre Farms
Performance |
| Timeline |
| Westpac Banking |
| Duxton Broadacre Farms |
Westpac Banking and Duxton Broadacre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Duxton Broadacre
The main advantage of trading using opposite Westpac Banking and Duxton Broadacre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Duxton Broadacre 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 Duxton Broadacre will offset losses from the drop in Duxton Broadacre's long position.| Westpac Banking vs. Champion Iron | Westpac Banking vs. Ridley | Westpac Banking vs. Australian Dairy Farms | Westpac Banking vs. Perpetual Credit Income |
| Duxton Broadacre vs. PVW Resources | Duxton Broadacre vs. Woolworths | Duxton Broadacre vs. Wesfarmers | Duxton Broadacre vs. Coles Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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