Correlation Between Commonwealth Bank and Maggie Beer
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Maggie Beer 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 Maggie Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Maggie Beer Holdings, you can compare the effects of market volatilities on Commonwealth Bank and Maggie Beer 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 Maggie Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Maggie Beer.
Diversification Opportunities for Commonwealth Bank and Maggie Beer
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Maggie is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Maggie Beer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maggie Beer Holdings 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 Maggie Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maggie Beer Holdings has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Maggie Beer go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Maggie Beer
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.27 times more return on investment than Maggie Beer. However, Commonwealth Bank is 3.64 times less risky than Maggie Beer. It trades about 0.53 of its potential returns per unit of risk. Maggie Beer Holdings is currently generating about -0.06 per unit of risk. If you would invest 14,286 in Commonwealth Bank on August 27, 2024 and sell it today you would earn a total of 1,617 from holding Commonwealth Bank or generate 11.32% 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. Maggie Beer Holdings
Performance |
| Timeline |
| Commonwealth Bank |
| Maggie Beer Holdings |
Commonwealth Bank and Maggie Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Maggie Beer
The main advantage of trading using opposite Commonwealth Bank and Maggie Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Maggie Beer 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 Maggie Beer will offset losses from the drop in Maggie Beer's long position.| Commonwealth Bank vs. BKI Investment | Commonwealth Bank vs. Centaurus Metals | Commonwealth Bank vs. Hotel Property Investments | Commonwealth Bank vs. Ainsworth Game Technology |
| Maggie Beer vs. Aneka Tambang Tbk | Maggie Beer vs. BHP Group Limited | Maggie Beer vs. Commonwealth Bank of | Maggie Beer vs. Commonwealth Bank of |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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