Correlation Between Whitehaven Coal and Australian Bond
Can any of the company-specific risk be diversified away by investing in both Whitehaven Coal and Australian Bond 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 Whitehaven Coal and Australian Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitehaven Coal and Australian Bond Exchange, you can compare the effects of market volatilities on Whitehaven Coal and Australian Bond 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 Whitehaven Coal with a short position of Australian Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitehaven Coal and Australian Bond.
Diversification Opportunities for Whitehaven Coal and Australian Bond
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Whitehaven and Australian is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Whitehaven Coal and Australian Bond Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Bond Exchange and Whitehaven Coal 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 Whitehaven Coal are associated (or correlated) with Australian Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Bond Exchange has no effect on the direction of Whitehaven Coal i.e., Whitehaven Coal and Australian Bond go up and down completely randomly.
Pair Corralation between Whitehaven Coal and Australian Bond
Assuming the 90 days trading horizon Whitehaven Coal is expected to generate 0.23 times more return on investment than Australian Bond. However, Whitehaven Coal is 4.4 times less risky than Australian Bond. It trades about 0.0 of its potential returns per unit of risk. Australian Bond Exchange is currently generating about 0.0 per unit of risk. If you would invest 832.00 in Whitehaven Coal on August 24, 2024 and sell it today you would lose (141.00) from holding Whitehaven Coal or give up 16.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitehaven Coal vs. Australian Bond Exchange
Performance |
| Timeline |
| Whitehaven Coal |
| Australian Bond Exchange |
Whitehaven Coal and Australian Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitehaven Coal and Australian Bond
The main advantage of trading using opposite Whitehaven Coal and Australian Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitehaven Coal position performs unexpectedly, Australian Bond 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 Australian Bond will offset losses from the drop in Australian Bond's long position.| Whitehaven Coal vs. Hotel Property Investments | Whitehaven Coal vs. REGAL ASIAN INVESTMENTS | Whitehaven Coal vs. Australian Agricultural | Whitehaven Coal vs. Black Rock Mining |
| Australian Bond vs. Ecofibre | Australian Bond vs. iShares Global Healthcare | Australian Bond vs. Ridley | Australian Bond vs. Australian Dairy Farms |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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