Correlation Between Westpac Banking and Agricultural Bank
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Agricultural Bank 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 Agricultural Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Agricultural Bank, you can compare the effects of market volatilities on Westpac Banking and Agricultural Bank 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 Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Agricultural Bank.
Diversification Opportunities for Westpac Banking and Agricultural Bank
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westpac and Agricultural is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Agricultural Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Westpac Banking i.e., Westpac Banking and Agricultural Bank go up and down completely randomly.
Pair Corralation between Westpac Banking and Agricultural Bank
Assuming the 90 days horizon Westpac Banking is expected to generate 1.42 times less return on investment than Agricultural Bank. In addition to that, Westpac Banking is 1.32 times more volatile than Agricultural Bank. It trades about 0.02 of its total potential returns per unit of risk. Agricultural Bank is currently generating about 0.05 per unit of volatility. If you would invest 50.00 in Agricultural Bank on November 5, 2024 and sell it today you would earn a total of 1.00 from holding Agricultural Bank or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Westpac Banking vs. Agricultural Bank
Performance |
| Timeline |
| Westpac Banking |
| Agricultural Bank |
Westpac Banking and Agricultural Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Agricultural Bank
The main advantage of trading using opposite Westpac Banking and Agricultural Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Agricultural Bank 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 Agricultural Bank will offset losses from the drop in Agricultural Bank's long position.| Westpac Banking vs. Commonwealth Bank of | Westpac Banking vs. Svenska Handelsbanken PK | Westpac Banking vs. ANZ Group Holdings | Westpac Banking vs. National Australia Bank |
| Agricultural Bank vs. China Construction Bank | Agricultural Bank vs. National Australia Bank | Agricultural Bank vs. Svenska Handelsbanken AB | Agricultural Bank vs. Bank of America |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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