Correlation Between Westpac Banking and Finexia Financial
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Finexia Financial 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 Finexia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Finexia Financial Group, you can compare the effects of market volatilities on Westpac Banking and Finexia Financial 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 Finexia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Finexia Financial.
Diversification Opportunities for Westpac Banking and Finexia Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westpac and Finexia is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial 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 Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Westpac Banking i.e., Westpac Banking and Finexia Financial go up and down completely randomly.
Pair Corralation between Westpac Banking and Finexia Financial
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.13 times more return on investment than Finexia Financial. However, Westpac Banking is 7.91 times less risky than Finexia Financial. It trades about 0.07 of its potential returns per unit of risk. Finexia Financial Group is currently generating about -0.02 per unit of risk. If you would invest 10,488 in Westpac Banking on November 2, 2024 and sell it today you would earn a total of 97.00 from holding Westpac Banking or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Finexia Financial Group
Performance |
| Timeline |
| Westpac Banking |
| Finexia Financial |
Westpac Banking and Finexia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Finexia Financial
The main advantage of trading using opposite Westpac Banking and Finexia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Finexia Financial 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 Finexia Financial will offset losses from the drop in Finexia Financial's long position.| Westpac Banking vs. Aneka Tambang Tbk | Westpac Banking vs. BHP Group Limited | Westpac Banking vs. Ecofibre | Westpac Banking vs. iShares Global Healthcare |
| Finexia Financial vs. MetalsGrove Mining | Finexia Financial vs. Stelar Metals | Finexia Financial vs. EMvision Medical Devices | Finexia Financial vs. Dalaroo Metals |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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