Correlation Between WESTPAC CPS and SUNCORP PREF

Can any of the company-specific risk be diversified away by investing in both WESTPAC CPS and SUNCORP PREF 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 CPS and SUNCORP PREF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WESTPAC CPS and SUNCORP PREF CPS3, you can compare the effects of market volatilities on WESTPAC CPS and SUNCORP PREF 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 CPS with a short position of SUNCORP PREF. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTPAC CPS and SUNCORP PREF.

Diversification Opportunities for WESTPAC CPS and SUNCORP PREF

0.0

Correlation Coefficient

WESTPAC CPS  SUNCORP PREF

Pay attention - limited upside

The 3 months correlation between WESTPAC and SUNCORP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WESTPAC CPS and SUNCORP PREF CPS3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNCORP PREF CPS3 and WESTPAC CPS 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 CPS are associated (or correlated) with SUNCORP PREF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNCORP PREF CPS3 has no effect on the direction of WESTPAC CPS i.e., WESTPAC CPS and SUNCORP PREF go up and down completely randomly.

Pair Corralation between WESTPAC CPS and SUNCORP PREF

If you would invest (100.00) in SUNCORP PREF CPS3 on October 10, 2024 and sell it today you would earn a total of  100.00  from holding SUNCORP PREF CPS3 or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WESTPAC CPS  vs.  SUNCORP PREF CPS3

WESTPAC CPS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTPAC CPS has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, WESTPAC CPS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SUNCORP PREF CPS3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUNCORP PREF CPS3 has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, SUNCORP PREF is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WESTPAC CPS and SUNCORP PREF

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

The idea behind WESTPAC CPS and SUNCORP PREF CPS3 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.