Correlation Between Commonwealth Bank and Centuria Capital
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Centuria Capital 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 Commonwealth Bank and Centuria Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Centuria Capital, you can compare the effects of market volatilities on Commonwealth Bank and Centuria Capital 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 Commonwealth Bank with a short position of Centuria Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Centuria Capital.
Diversification Opportunities for Commonwealth Bank and Centuria Capital
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Centuria is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Centuria Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centuria Capital and Commonwealth Bank 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 Commonwealth Bank are associated (or correlated) with Centuria Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centuria Capital has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Centuria Capital go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Centuria Capital
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.76 times more return on investment than Centuria Capital. However, Commonwealth Bank is 1.32 times less risky than Centuria Capital. It trades about 0.37 of its potential returns per unit of risk. Centuria Capital is currently generating about 0.11 per unit of risk. If you would invest 14,293 in Commonwealth Bank on August 31, 2024 and sell it today you would earn a total of 1,565 from holding Commonwealth Bank or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank vs. Centuria Capital
Performance |
| Timeline |
| Commonwealth Bank |
| Centuria Capital |
Commonwealth Bank and Centuria Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Centuria Capital
The main advantage of trading using opposite Commonwealth Bank and Centuria Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Centuria Capital 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 Centuria Capital will offset losses from the drop in Centuria Capital's long position.| Commonwealth Bank vs. Oneview Healthcare PLC | Commonwealth Bank vs. Mayfield Childcare | Commonwealth Bank vs. Toys R Us | Commonwealth Bank vs. Event Hospitality and |
| Centuria Capital vs. Saferoads Holdings | Centuria Capital vs. Insignia Financial | Centuria Capital vs. Advanced Braking Technology | Centuria Capital vs. Prime Financial Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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