Correlation Between Westpac Banking and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Sandfire Resources 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 Sandfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Sandfire Resources NL, you can compare the effects of market volatilities on Westpac Banking and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Sandfire Resources.
Diversification Opportunities for Westpac Banking and Sandfire Resources
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Westpac and Sandfire is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Westpac Banking i.e., Westpac Banking and Sandfire Resources go up and down completely randomly.
Pair Corralation between Westpac Banking and Sandfire Resources
Assuming the 90 days trading horizon Westpac Banking is expected to generate 3.28 times less return on investment than Sandfire Resources. But when comparing it to its historical volatility, Westpac Banking is 6.61 times less risky than Sandfire Resources. It trades about 0.11 of its potential returns per unit of risk. Sandfire Resources NL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 625.00 in Sandfire Resources NL on October 14, 2024 and sell it today you would earn a total of 356.00 from holding Sandfire Resources NL or generate 56.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 53.0% |
| Values | Daily Returns |
Westpac Banking vs. Sandfire Resources NL
Performance |
| Timeline |
| Westpac Banking |
| Sandfire Resources |
Westpac Banking and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Sandfire Resources
The main advantage of trading using opposite Westpac Banking and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Westpac Banking vs. National Storage REIT | Westpac Banking vs. Genetic Technologies | Westpac Banking vs. Thorney Technologies | Westpac Banking vs. Step One Clothing |
| Sandfire Resources vs. Homeco Daily Needs | Sandfire Resources vs. Hudson Investment Group | Sandfire Resources vs. Westpac Banking | Sandfire Resources vs. Commonwealth Bank of |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |