Correlation Between Westpac Banking and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Southern Cross 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 Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Southern Cross Media, you can compare the effects of market volatilities on Westpac Banking and Southern Cross 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 Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Southern Cross.
Diversification Opportunities for Westpac Banking and Southern Cross
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westpac and Southern is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Southern Cross Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Media 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 Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Media has no effect on the direction of Westpac Banking i.e., Westpac Banking and Southern Cross go up and down completely randomly.
Pair Corralation between Westpac Banking and Southern Cross
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.11 times more return on investment than Southern Cross. However, Westpac Banking is 9.34 times less risky than Southern Cross. It trades about 0.15 of its potential returns per unit of risk. Southern Cross Media is currently generating about -0.1 per unit of risk. If you would invest 10,491 in Westpac Banking on October 22, 2024 and sell it today you would earn a total of 74.00 from holding Westpac Banking or generate 0.71% 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. Southern Cross Media
Performance |
| Timeline |
| Westpac Banking |
| Southern Cross Media |
Westpac Banking and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Southern Cross
The main advantage of trading using opposite Westpac Banking and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.| Westpac Banking vs. Westpac Banking | Westpac Banking vs. Ecofibre | Westpac Banking vs. iShares Global Healthcare | Westpac Banking vs. Ridley |
| Southern Cross vs. Wt Financial Group | Southern Cross vs. Super Retail Group | Southern Cross vs. Liberty Financial Group | Southern Cross vs. Bell 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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