Correlation Between Westpac Banking and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and Sumitomo Mitsui 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 Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Westpac Banking and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Sumitomo Mitsui.
Diversification Opportunities for Westpac Banking and Sumitomo Mitsui
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and Sumitomo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Westpac Banking i.e., Westpac Banking and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Westpac Banking and Sumitomo Mitsui
Assuming the 90 days horizon Westpac Banking is expected to generate 0.81 times more return on investment than Sumitomo Mitsui. However, Westpac Banking is 1.24 times less risky than Sumitomo Mitsui. It trades about 0.15 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.1 per unit of risk. If you would invest 1,885 in Westpac Banking on August 24, 2024 and sell it today you would earn a total of 218.00 from holding Westpac Banking or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Westpac Banking vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Westpac Banking |
| Sumitomo Mitsui Financial |
Westpac Banking and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Sumitomo Mitsui
The main advantage of trading using opposite Westpac Banking and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui'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 |
| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. HSBC Holdings PLC | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. Citigroup |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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