Correlation Between Westpac Banking and Block
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Block 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 Block into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Block Inc, you can compare the effects of market volatilities on Westpac Banking and Block 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 Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Block.
Diversification Opportunities for Westpac Banking and Block
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westpac and Block is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc 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 Block. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Block Inc has no effect on the direction of Westpac Banking i.e., Westpac Banking and Block go up and down completely randomly.
Pair Corralation between Westpac Banking and Block
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.12 times more return on investment than Block. However, Westpac Banking is 8.23 times less risky than Block. It trades about 0.23 of its potential returns per unit of risk. Block Inc is currently generating about -0.18 per unit of risk. If you would invest 10,432 in Westpac Banking on October 13, 2024 and sell it today you would earn a total of 139.00 from holding Westpac Banking or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Block Inc
Performance |
| Timeline |
| Westpac Banking |
| Block Inc |
Westpac Banking and Block Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Block
The main advantage of trading using opposite Westpac Banking and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Block 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 Block will offset losses from the drop in Block's long position.| Westpac Banking vs. Diversified United Investment | Westpac Banking vs. Auctus Alternative Investments | Westpac Banking vs. Firstwave Cloud Technology | Westpac Banking vs. Hotel Property Investments |
| Block vs. Advanced Braking Technology | Block vs. Sandon Capital Investments | Block vs. Ainsworth Game Technology | Block vs. Australian Strategic Materials |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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