Correlation Between Commonwealth Bank and Marquee Resources
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Marquee Resources 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 Marquee Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Marquee Resources, you can compare the effects of market volatilities on Commonwealth Bank and Marquee Resources 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 Marquee Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Marquee Resources.
Diversification Opportunities for Commonwealth Bank and Marquee Resources
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and Marquee is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Marquee Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marquee Resources 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 Marquee Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marquee Resources has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Marquee Resources go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Marquee Resources
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.18 times more return on investment than Marquee Resources. However, Commonwealth Bank is 5.64 times less risky than Marquee Resources. It trades about 0.19 of its potential returns per unit of risk. Marquee Resources is currently generating about 0.03 per unit of risk. If you would invest 11,912 in Commonwealth Bank on August 30, 2024 and sell it today you would earn a total of 3,946 from holding Commonwealth Bank or generate 33.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Commonwealth Bank vs. Marquee Resources
Performance |
| Timeline |
| Commonwealth Bank |
| Marquee Resources |
Commonwealth Bank and Marquee Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Marquee Resources
The main advantage of trading using opposite Commonwealth Bank and Marquee Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Marquee Resources 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 Marquee Resources will offset losses from the drop in Marquee Resources' long position.| Commonwealth Bank vs. Treasury Wine Estates | Commonwealth Bank vs. Iron Road | Commonwealth Bank vs. EMvision Medical Devices | Commonwealth Bank vs. Aussie Broadband |
| Marquee Resources vs. Fisher Paykel Healthcare | Marquee Resources vs. Health and Plant | Marquee Resources vs. Oceania Healthcare | Marquee Resources vs. Event Hospitality and |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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