Correlation Between Commonwealth Bank and Hawsons Iron
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Hawsons Iron 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 Hawsons Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Hawsons Iron, you can compare the effects of market volatilities on Commonwealth Bank and Hawsons Iron 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 Hawsons Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Hawsons Iron.
Diversification Opportunities for Commonwealth Bank and Hawsons Iron
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commonwealth and Hawsons is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Hawsons Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawsons Iron 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 Hawsons Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawsons Iron has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Hawsons Iron go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Hawsons Iron
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.41 times more return on investment than Hawsons Iron. However, Commonwealth Bank is 2.46 times less risky than Hawsons Iron. It trades about 0.22 of its potential returns per unit of risk. Hawsons Iron is currently generating about -0.18 per unit of risk. If you would invest 15,004 in Commonwealth Bank on January 26, 2025 and sell it today you would earn a total of 1,468 from holding Commonwealth Bank or generate 9.78% 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. Hawsons Iron
Performance |
| Timeline |
| Commonwealth Bank |
| Hawsons Iron |
Commonwealth Bank and Hawsons Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Hawsons Iron
The main advantage of trading using opposite Commonwealth Bank and Hawsons Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Hawsons Iron 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 Hawsons Iron will offset losses from the drop in Hawsons Iron's long position.| Commonwealth Bank vs. Mirrabooka Investments | Commonwealth Bank vs. Regal Investment | Commonwealth Bank vs. Auctus Alternative Investments | Commonwealth Bank vs. A1 Investments Resources |
| Hawsons Iron vs. Northern Star Resources | Hawsons Iron vs. Evolution Mining | Hawsons Iron vs. Alcoa Inc | Hawsons Iron vs. Bluescope Steel |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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