Correlation Between Westpac Banking and Platinum Asset
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Platinum Asset 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 Platinum Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Platinum Asset Management, you can compare the effects of market volatilities on Westpac Banking and Platinum Asset 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 Platinum Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Platinum Asset.
Diversification Opportunities for Westpac Banking and Platinum Asset
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westpac and Platinum is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Platinum Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asset Management 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 Platinum Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asset Management has no effect on the direction of Westpac Banking i.e., Westpac Banking and Platinum Asset go up and down completely randomly.
Pair Corralation between Westpac Banking and Platinum Asset
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.15 times more return on investment than Platinum Asset. However, Westpac Banking is 6.47 times less risky than Platinum Asset. It trades about 0.08 of its potential returns per unit of risk. Platinum Asset Management is currently generating about -0.05 per unit of risk. If you would invest 9,949 in Westpac Banking on September 18, 2024 and sell it today you would earn a total of 491.00 from holding Westpac Banking or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Platinum Asset Management
Performance |
| Timeline |
| Westpac Banking |
| Platinum Asset Management |
Westpac Banking and Platinum Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Platinum Asset
The main advantage of trading using opposite Westpac Banking and Platinum Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Platinum Asset 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 Platinum Asset will offset losses from the drop in Platinum Asset's long position.| Westpac Banking vs. Westpac Banking | Westpac Banking vs. De Grey Mining | Westpac Banking vs. Pointsbet Holdings | Westpac Banking vs. Indiana Resources |
| Platinum Asset vs. Charter Hall Retail | Platinum Asset vs. Queste Communications | Platinum Asset vs. Ironbark Capital | Platinum Asset vs. Bluescope Steel |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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