Correlation Between Commonwealth Bank and Skycity Entertainment
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Skycity Entertainment 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 Skycity Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Skycity Entertainment Group, you can compare the effects of market volatilities on Commonwealth Bank and Skycity Entertainment 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 Skycity Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Skycity Entertainment.
Diversification Opportunities for Commonwealth Bank and Skycity Entertainment
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commonwealth and Skycity is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Skycity Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skycity Entertainment 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 Skycity Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skycity Entertainment has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Skycity Entertainment go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Skycity Entertainment
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.48 times more return on investment than Skycity Entertainment. However, Commonwealth Bank is 2.1 times less risky than Skycity Entertainment. It trades about 0.18 of its potential returns per unit of risk. Skycity Entertainment Group is currently generating about -0.05 per unit of risk. If you would invest 12,027 in Commonwealth Bank on September 2, 2024 and sell it today you would earn a total of 3,831 from holding Commonwealth Bank or generate 31.85% 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. Skycity Entertainment Group
Performance |
| Timeline |
| Commonwealth Bank |
| Skycity Entertainment |
Commonwealth Bank and Skycity Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Skycity Entertainment
The main advantage of trading using opposite Commonwealth Bank and Skycity Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Skycity Entertainment 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 Skycity Entertainment will offset losses from the drop in Skycity Entertainment's long position.| Commonwealth Bank vs. Macquarie Group | Commonwealth Bank vs. Rio Tinto | Commonwealth Bank vs. CSL | Commonwealth Bank 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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