Correlation Between Liberty Financial and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Liberty Financial 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 Liberty Financial and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Financial Group and Westpac Banking, you can compare the effects of market volatilities on Liberty Financial 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 Liberty Financial with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Financial and Westpac Banking.
Diversification Opportunities for Liberty Financial and Westpac Banking
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and Westpac is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Financial Group and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Liberty Financial 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 Liberty Financial Group 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 Liberty Financial i.e., Liberty Financial and Westpac Banking go up and down completely randomly.
Pair Corralation between Liberty Financial and Westpac Banking
Assuming the 90 days trading horizon Liberty Financial Group is expected to under-perform the Westpac Banking. In addition to that, Liberty Financial is 10.29 times more volatile than Westpac Banking. It trades about -0.01 of its total potential returns per unit of risk. Westpac Banking is currently generating about 0.07 per unit of volatility. If you would invest 10,500 in Westpac Banking on October 6, 2025 and sell it today you would earn a total of 104.00 from holding Westpac Banking or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Financial Group vs. Westpac Banking
Performance |
| Timeline |
| Liberty Financial |
| Westpac Banking |
Liberty Financial and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Financial and Westpac Banking
The main advantage of trading using opposite Liberty Financial and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Financial 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.| Liberty Financial vs. Pearl Gull Iron | Liberty Financial vs. Complii Fintech Solutions | Liberty Financial vs. Ainsworth Game Technology | Liberty Financial vs. Remsense Technologies |
| Westpac Banking vs. Aneka Tambang TBK | Westpac Banking vs. ANZ Group Holdings | Westpac Banking vs. Australia and New | Westpac Banking vs. Australia and New |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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