Correlation Between Westpac Banking and Staude Capital
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Staude Capital 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 Staude Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Staude Capital Global, you can compare the effects of market volatilities on Westpac Banking and Staude Capital 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 Staude Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Staude Capital.
Diversification Opportunities for Westpac Banking and Staude Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westpac and Staude is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Staude Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staude Capital Global 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 Staude Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staude Capital Global has no effect on the direction of Westpac Banking i.e., Westpac Banking and Staude Capital go up and down completely randomly.
Pair Corralation between Westpac Banking and Staude Capital
Assuming the 90 days trading horizon Westpac Banking is expected to generate 1.76 times less return on investment than Staude Capital. But when comparing it to its historical volatility, Westpac Banking is 3.84 times less risky than Staude Capital. It trades about 0.1 of its potential returns per unit of risk. Staude Capital Global is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 101.00 in Staude Capital Global on August 28, 2024 and sell it today you would earn a total of 30.00 from holding Staude Capital Global or generate 29.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 46.79% |
Values | Daily Returns |
Westpac Banking vs. Staude Capital Global
Performance |
Timeline |
Westpac Banking |
Staude Capital Global |
Westpac Banking and Staude Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westpac Banking and Staude Capital
The main advantage of trading using opposite Westpac Banking and Staude Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Staude Capital 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 Staude Capital will offset losses from the drop in Staude Capital's long position.Westpac Banking vs. Origin Energy | Westpac Banking vs. Insurance Australia Group | Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Ecofibre |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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