Correlation Between Commonwealth Bank and Genetic Technologies
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Genetic Technologies 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 Genetic Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Genetic Technologies, you can compare the effects of market volatilities on Commonwealth Bank and Genetic Technologies 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 Genetic Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Genetic Technologies.
Diversification Opportunities for Commonwealth Bank and Genetic Technologies
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Genetic is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Genetic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genetic Technologies 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 Genetic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genetic Technologies has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Genetic Technologies go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Genetic Technologies
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.33 times more return on investment than Genetic Technologies. However, Commonwealth Bank is 3.01 times less risky than Genetic Technologies. It trades about 0.14 of its potential returns per unit of risk. Genetic Technologies is currently generating about -0.05 per unit of risk. If you would invest 14,177 in Commonwealth Bank on September 2, 2024 and sell it today you would earn a total of 1,681 from holding Commonwealth Bank or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.21% |
| Values | Daily Returns |
Commonwealth Bank vs. Genetic Technologies
Performance |
| Timeline |
| Commonwealth Bank |
| Genetic Technologies |
Commonwealth Bank and Genetic Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Genetic Technologies
The main advantage of trading using opposite Commonwealth Bank and Genetic Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Genetic Technologies 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 Genetic Technologies will offset losses from the drop in Genetic Technologies' long position.| Commonwealth Bank vs. Macquarie Group | Commonwealth Bank vs. Rio Tinto | Commonwealth Bank vs. CSL | Commonwealth Bank vs. Commonwealth Bank of |
| Genetic Technologies vs. Land Homes Group | Genetic Technologies vs. National Storage REIT | Genetic Technologies vs. Homeco Daily Needs | Genetic Technologies vs. Nufarm Finance NZ |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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