Correlation Between Westpac Banking and Dotz Nano
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Dotz Nano 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 Dotz Nano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Dotz Nano, you can compare the effects of market volatilities on Westpac Banking and Dotz Nano 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 Dotz Nano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Dotz Nano.
Diversification Opportunities for Westpac Banking and Dotz Nano
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westpac and Dotz is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Dotz Nano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dotz Nano 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 Dotz Nano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dotz Nano has no effect on the direction of Westpac Banking i.e., Westpac Banking and Dotz Nano go up and down completely randomly.
Pair Corralation between Westpac Banking and Dotz Nano
Assuming the 90 days trading horizon Westpac Banking is expected to under-perform the Dotz Nano. But the stock apears to be less risky and, when comparing its historical volatility, Westpac Banking is 16.52 times less risky than Dotz Nano. The stock trades about -0.09 of its potential returns per unit of risk. The Dotz Nano is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 7.70 in Dotz Nano on September 20, 2024 and sell it today you would earn a total of 1.70 from holding Dotz Nano or generate 22.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Westpac Banking vs. Dotz Nano
Performance |
| Timeline |
| Westpac Banking |
| Dotz Nano |
Westpac Banking and Dotz Nano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Dotz Nano
The main advantage of trading using opposite Westpac Banking and Dotz Nano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Dotz Nano 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 Dotz Nano will offset losses from the drop in Dotz Nano's long position.| Westpac Banking vs. Westpac Banking | Westpac Banking vs. De Grey Mining | Westpac Banking vs. Pointsbet Holdings | Westpac Banking vs. Indiana Resources |
| Dotz Nano vs. Westpac Banking | Dotz Nano vs. Galena Mining | Dotz Nano vs. Black Rock Mining | Dotz Nano vs. Bank of Queensland |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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