Correlation Between Pengana Private and Westpac Banking

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

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

Diversification Opportunities for Pengana Private and Westpac Banking

-0.21

Correlation Coefficient

Pengana Private  Westpac Banking

Very good diversification

The 3 months correlation between Pengana and Westpac is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pengana Private Equity and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Pengana Private 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 Pengana Private Equity are associated (or correlated) with Westpac Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westpac Banking has no effect on the direction of Pengana Private i.e., Pengana Private and Westpac Banking go up and down completely randomly.

Pair Corralation between Pengana Private and Westpac Banking

Assuming the 90 days trading horizon Pengana Private Equity is expected to under-perform the Westpac Banking. In addition to that, Pengana Private is 4.85 times more volatile than Westpac Banking. It trades about -0.06 of its total potential returns per unit of risk. Westpac Banking is currently generating about 0.02 per unit of volatility. If you would invest  10,443  in Westpac Banking on September 4, 2024 and sell it today you would earn a total of  47.00  from holding Westpac Banking or generate 0.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Pengana Private Equity  vs.  Westpac Banking

Pengana Private Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pengana Private Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Westpac Banking

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westpac Banking are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Westpac Banking is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pengana Private and Westpac Banking

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

The idea behind Pengana Private Equity and Westpac 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.