Correlation Between WESTPAC CPS and SEVEN GRP

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

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

Diversification Opportunities for WESTPAC CPS and SEVEN GRP

0.0

Correlation Coefficient

WESTPAC CPS  SEVEN GRP

Pay attention - limited upside

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

Pair Corralation between WESTPAC CPS and SEVEN GRP

If you would invest (100.00) in SEVEN GRP PREF on October 10, 2024 and sell it today you would earn a total of  100.00  from holding SEVEN GRP PREF 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.  SEVEN GRP PREF

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.

SEVEN GRP PREF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEVEN GRP PREF has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, SEVEN GRP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WESTPAC CPS and SEVEN GRP

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

The idea behind WESTPAC CPS and SEVEN GRP PREF 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.