Correlation Between Commonwealth Bank and EMvision Medical
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and EMvision Medical 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 EMvision Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and EMvision Medical Devices, you can compare the effects of market volatilities on Commonwealth Bank and EMvision Medical 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 EMvision Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and EMvision Medical.
Diversification Opportunities for Commonwealth Bank and EMvision Medical
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and EMvision is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and EMvision Medical Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMvision Medical Devices 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 EMvision Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMvision Medical Devices has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and EMvision Medical go up and down completely randomly.
Pair Corralation between Commonwealth Bank and EMvision Medical
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.39 times more return on investment than EMvision Medical. However, Commonwealth Bank is 2.56 times less risky than EMvision Medical. It trades about 0.38 of its potential returns per unit of risk. EMvision Medical Devices is currently generating about 0.03 per unit of risk. If you would invest 14,275 in Commonwealth Bank on September 1, 2024 and sell it today you would earn a total of 1,583 from holding Commonwealth Bank or generate 11.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank vs. EMvision Medical Devices
Performance |
| Timeline |
| Commonwealth Bank |
| EMvision Medical Devices |
Commonwealth Bank and EMvision Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and EMvision Medical
The main advantage of trading using opposite Commonwealth Bank and EMvision Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, EMvision Medical 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 EMvision Medical will offset losses from the drop in EMvision Medical's long position.| Commonwealth Bank vs. Phoslock Environmental Technologies | Commonwealth Bank vs. Global Health | Commonwealth Bank vs. Air New Zealand | Commonwealth Bank vs. Vulcan Steel |
| EMvision Medical vs. Jupiter Energy | EMvision Medical vs. WA1 Resources | EMvision Medical vs. Cooper Metals | EMvision Medical vs. OD6 Metals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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