Correlation Between Westpac Banking and Ras Technology
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Ras Technology 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 Ras Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Ras Technology Holdings, you can compare the effects of market volatilities on Westpac Banking and Ras Technology 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 Ras Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Ras Technology.
Diversification Opportunities for Westpac Banking and Ras Technology
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westpac and Ras is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Ras Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ras Technology Holdings 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 Ras Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ras Technology Holdings has no effect on the direction of Westpac Banking i.e., Westpac Banking and Ras Technology go up and down completely randomly.
Pair Corralation between Westpac Banking and Ras Technology
Assuming the 90 days trading horizon Westpac Banking is expected to generate 6.06 times less return on investment than Ras Technology. But when comparing it to its historical volatility, Westpac Banking is 11.52 times less risky than Ras Technology. It trades about 0.11 of its potential returns per unit of risk. Ras Technology Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Ras Technology Holdings on August 26, 2024 and sell it today you would earn a total of 55.00 from holding Ras Technology Holdings or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 46.6% |
| Values | Daily Returns |
Westpac Banking vs. Ras Technology Holdings
Performance |
| Timeline |
| Westpac Banking |
| Ras Technology Holdings |
Westpac Banking and Ras Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Ras Technology
The main advantage of trading using opposite Westpac Banking and Ras Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Ras Technology 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 Ras Technology will offset losses from the drop in Ras Technology's long position.| Westpac Banking vs. Origin Energy | Westpac Banking vs. Insurance Australia Group | Westpac Banking vs. Hotel Property Investments | Westpac Banking vs. Ecofibre |
| Ras Technology vs. Westpac Banking | Ras Technology vs. Commonwealth Bank of | Ras Technology vs. Pioneer Credit | Ras Technology vs. Wt Financial Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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