Correlation Between Alternative Investment and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Alternative Investment and Commonwealth Bank 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 Alternative Investment and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Investment Trust and Commonwealth Bank, you can compare the effects of market volatilities on Alternative Investment and Commonwealth Bank 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 Alternative Investment with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Investment and Commonwealth Bank.
Diversification Opportunities for Alternative Investment and Commonwealth Bank
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alternative and Commonwealth is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and Commonwealth Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Alternative Investment 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 Alternative Investment Trust are associated (or correlated) with Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of Alternative Investment i.e., Alternative Investment and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Alternative Investment and Commonwealth Bank
Assuming the 90 days trading horizon Alternative Investment Trust is expected to generate 1.44 times more return on investment than Commonwealth Bank. However, Alternative Investment is 1.44 times more volatile than Commonwealth Bank. It trades about 0.15 of its potential returns per unit of risk. Commonwealth Bank is currently generating about 0.05 per unit of risk. If you would invest 140.00 in Alternative Investment Trust on November 7, 2024 and sell it today you would earn a total of 7.00 from holding Alternative Investment Trust or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Investment Trust vs. Commonwealth Bank
Performance |
| Timeline |
| Alternative Investment |
| Commonwealth Bank |
Alternative Investment and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Investment and Commonwealth Bank
The main advantage of trading using opposite Alternative Investment and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Investment position performs unexpectedly, Commonwealth Bank 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 Commonwealth Bank will offset losses from the drop in Commonwealth Bank's long position.| Alternative Investment vs. G8 Education | Alternative Investment vs. Kneomedia | Alternative Investment vs. Southern Cross Media | Alternative Investment vs. Dalaroo Metals |
| Commonwealth Bank vs. Complii FinTech Solutions | Commonwealth Bank vs. Flagship Investments | Commonwealth Bank vs. BlackWall Property Funds | Commonwealth Bank vs. Carlton Investments |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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