Correlation Between ABACUS STORAGE and Westpac Banking

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

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

Diversification Opportunities for ABACUS STORAGE and Westpac Banking

-0.5

Correlation Coefficient

ABACUS STORAGE  Westpac Banking

Very good diversification

The 3 months correlation between ABACUS and Westpac is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ABACUS STORAGE KING and Westpac Banking Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking Corp and ABACUS STORAGE 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 ABACUS STORAGE KING 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 Corp has no effect on the direction of ABACUS STORAGE i.e., ABACUS STORAGE and Westpac Banking go up and down completely randomly.

Pair Corralation between ABACUS STORAGE and Westpac Banking

Assuming the 90 days trading horizon ABACUS STORAGE is expected to generate 1.1 times less return on investment than Westpac Banking. In addition to that, ABACUS STORAGE is 4.33 times more volatile than Westpac Banking Corp. It trades about 0.01 of its total potential returns per unit of risk. Westpac Banking Corp is currently generating about 0.03 per unit of volatility. If you would invest  10,175  in Westpac Banking Corp on September 4, 2024 and sell it today you would earn a total of  70.00  from holding Westpac Banking Corp or generate 0.69% return on investment over 90 days.

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

ABACUS STORAGE KING  vs.  Westpac Banking Corp

ABACUS STORAGE KING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABACUS STORAGE KING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, ABACUS STORAGE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Westpac Banking Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westpac Banking Corp are ranked lower than 2 (%) 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 ABACUS STORAGE and Westpac Banking

The main advantage of trading using opposite ABACUS STORAGE and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABACUS STORAGE 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 ABACUS STORAGE KING and Westpac Banking Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.