Correlation Between Auswide Bank and BNK Banking

Can any of the company-specific risk be diversified away by investing in both Auswide Bank and BNK Banking 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 Auswide Bank and BNK Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auswide Bank and BNK Banking, you can compare the effects of market volatilities on Auswide Bank and BNK Banking 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 Auswide Bank with a short position of BNK Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auswide Bank and BNK Banking.

Diversification Opportunities for Auswide Bank and BNK Banking

-0.62

Correlation Coefficient

Auswide Bank  BNK Banking

Excellent diversification

The 3 months correlation between Auswide and BNK is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Auswide Bank and BNK Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Banking and Auswide Bank 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 Auswide Bank are associated (or correlated) with BNK Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Banking has no effect on the direction of Auswide Bank i.e., Auswide Bank and BNK Banking go up and down completely randomly.

Pair Corralation between Auswide Bank and BNK Banking

Assuming the 90 days trading horizon Auswide Bank is expected to generate 0.72 times more return on investment than BNK Banking. However, Auswide Bank is 1.39 times less risky than BNK Banking. It trades about 0.09 of its potential returns per unit of risk. BNK Banking is currently generating about -0.02 per unit of risk. If you would invest  426.00  in Auswide Bank on September 21, 2024 and sell it today you would earn a total of  47.00  from holding Auswide Bank or generate 11.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Auswide Bank  vs.  BNK Banking

Auswide Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Auswide Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Auswide Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BNK Banking

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNK Banking has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, BNK Banking is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Auswide Bank and BNK Banking

The main advantage of trading using opposite Auswide Bank and BNK Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auswide Bank position performs unexpectedly, BNK Banking 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 BNK Banking will offset losses from the drop in BNK Banking's long position.

The idea behind Auswide Bank and BNK Banking pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.