Correlation Between Westpac Banking and Navigator Global
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Navigator Global 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 Navigator Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Navigator Global Investments, you can compare the effects of market volatilities on Westpac Banking and Navigator Global 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 Navigator Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Navigator Global.
Diversification Opportunities for Westpac Banking and Navigator Global
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Westpac and Navigator is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Navigator Global Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navigator Global Inv 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 Navigator Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navigator Global Inv has no effect on the direction of Westpac Banking i.e., Westpac Banking and Navigator Global go up and down completely randomly.
Pair Corralation between Westpac Banking and Navigator Global
Assuming the 90 days trading horizon Westpac Banking is expected to under-perform the Navigator Global. But the stock apears to be less risky and, when comparing its historical volatility, Westpac Banking is 9.78 times less risky than Navigator Global. The stock trades about -0.3 of its potential returns per unit of risk. The Navigator Global Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 166.00 in Navigator Global Investments on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Navigator Global Investments or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Navigator Global Investments
Performance |
| Timeline |
| Westpac Banking |
| Navigator Global Inv |
Westpac Banking and Navigator Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Navigator Global
The main advantage of trading using opposite Westpac Banking and Navigator Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Navigator Global 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 Navigator Global will offset losses from the drop in Navigator Global's long position.| Westpac Banking vs. Origin Energy | Westpac Banking vs. Insurance Australia Group | Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Ecofibre |
| Navigator Global vs. National Australia Bank | Navigator Global vs. National Australia Bank | Navigator Global vs. Westpac Banking | Navigator Global vs. National Australia Bank |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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