Correlation Between Commonwealth Bank and Energy Technologies
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Energy Technologies 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 Energy Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and Energy Technologies Limited, you can compare the effects of market volatilities on Commonwealth Bank and Energy Technologies 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 Energy Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Energy Technologies.
Diversification Opportunities for Commonwealth Bank and Energy Technologies
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and Energy is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Energy Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Technologies 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 of are associated (or correlated) with Energy Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Technologies has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Energy Technologies go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Energy Technologies
Assuming the 90 days trading horizon Commonwealth Bank of is expected to under-perform the Energy Technologies. But the preferred stock apears to be less risky and, when comparing its historical volatility, Commonwealth Bank of is 6.56 times less risky than Energy Technologies. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Energy Technologies Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Energy Technologies Limited on September 13, 2024 and sell it today you would earn a total of 0.10 from holding Energy Technologies Limited or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Energy Technologies Limited
Performance |
| Timeline |
| Commonwealth Bank |
| Energy Technologies |
Commonwealth Bank and Energy Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Energy Technologies
The main advantage of trading using opposite Commonwealth Bank and Energy Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Energy Technologies 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 Energy Technologies will offset losses from the drop in Energy Technologies' long position.| Commonwealth Bank vs. Stelar Metals | Commonwealth Bank vs. Australian Unity Office | Commonwealth Bank vs. Step One Clothing | Commonwealth Bank vs. Embark Education Group |
| Energy Technologies vs. Aneka Tambang Tbk | Energy Technologies vs. National Australia Bank | Energy Technologies vs. Commonwealth Bank of | Energy Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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