Correlation Between Commonwealth Bank and Itech Minerals
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Itech Minerals 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 Itech Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Itech Minerals, you can compare the effects of market volatilities on Commonwealth Bank and Itech Minerals 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 Itech Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Itech Minerals.
Diversification Opportunities for Commonwealth Bank and Itech Minerals
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commonwealth and Itech is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Itech Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itech Minerals 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 Itech Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itech Minerals has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Itech Minerals go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Itech Minerals
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.31 times more return on investment than Itech Minerals. However, Commonwealth Bank is 3.25 times less risky than Itech Minerals. It trades about 0.29 of its potential returns per unit of risk. Itech Minerals is currently generating about -0.15 per unit of risk. If you would invest 13,682 in Commonwealth Bank on September 13, 2024 and sell it today you would earn a total of 2,070 from holding Commonwealth Bank or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank vs. Itech Minerals
Performance |
| Timeline |
| Commonwealth Bank |
| Itech Minerals |
Commonwealth Bank and Itech Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Itech Minerals
The main advantage of trading using opposite Commonwealth Bank and Itech Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Itech Minerals 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 Itech Minerals will offset losses from the drop in Itech Minerals' long position.| Commonwealth Bank vs. Autosports Group | Commonwealth Bank vs. Richmond Vanadium Technology | Commonwealth Bank vs. Retail Food Group | Commonwealth Bank vs. Mach7 Technologies |
| Itech Minerals vs. Stelar Metals | Itech Minerals vs. ACDC Metals | Itech Minerals vs. Green Technology Metals | Itech Minerals vs. Charter Hall Retail |
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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