Correlation Between Westpac Banking and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Mayfield Childcare 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 Mayfield Childcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Mayfield Childcare, you can compare the effects of market volatilities on Westpac Banking and Mayfield Childcare 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 Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Mayfield Childcare.
Diversification Opportunities for Westpac Banking and Mayfield Childcare
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and Mayfield is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare 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 Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of Westpac Banking i.e., Westpac Banking and Mayfield Childcare go up and down completely randomly.
Pair Corralation between Westpac Banking and Mayfield Childcare
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.18 times more return on investment than Mayfield Childcare. However, Westpac Banking is 5.45 times less risky than Mayfield Childcare. It trades about 0.01 of its potential returns per unit of risk. Mayfield Childcare is currently generating about -0.02 per unit of risk. If you would invest 10,570 in Westpac Banking on August 29, 2024 and sell it today you would earn a total of 12.00 from holding Westpac Banking or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Westpac Banking vs. Mayfield Childcare
Performance |
| Timeline |
| Westpac Banking |
| Mayfield Childcare |
Westpac Banking and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Mayfield Childcare
The main advantage of trading using opposite Westpac Banking and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare's long position.| Westpac Banking vs. Champion Iron | Westpac Banking vs. Ridley | Westpac Banking vs. Australian Dairy Farms | Westpac Banking vs. Perpetual Credit Income |
| Mayfield Childcare vs. Summit Resources Limited | Mayfield Childcare vs. Champion Iron | Mayfield Childcare vs. Ridley | Mayfield Childcare vs. Peel Mining |
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 Stocks Directory module to find actively traded stocks across global markets.
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