Correlation Between Commonwealth Bank and Ecofibre
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Ecofibre 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 Ecofibre 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 Ecofibre, you can compare the effects of market volatilities on Commonwealth Bank and Ecofibre 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 Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Ecofibre.
Diversification Opportunities for Commonwealth Bank and Ecofibre
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commonwealth and Ecofibre is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre 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 Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Ecofibre go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Ecofibre
Assuming the 90 days trading horizon Commonwealth Bank of is expected to generate 0.08 times more return on investment than Ecofibre. However, Commonwealth Bank of is 11.92 times less risky than Ecofibre. It trades about 0.12 of its potential returns per unit of risk. Ecofibre is currently generating about -0.3 per unit of risk. If you would invest 10,195 in Commonwealth Bank of on September 1, 2024 and sell it today you would earn a total of 80.00 from holding Commonwealth Bank of or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Ecofibre
Performance |
| Timeline |
| Commonwealth Bank |
| Ecofibre |
Commonwealth Bank and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Ecofibre
The main advantage of trading using opposite Commonwealth Bank and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| Commonwealth Bank vs. BTC Health Limited | Commonwealth Bank vs. Queste Communications | Commonwealth Bank vs. Stelar Metals | Commonwealth Bank vs. Epsilon Healthcare |
| Ecofibre vs. Credit Clear | Ecofibre vs. Lendlease Group | Ecofibre vs. Finexia Financial Group | Ecofibre vs. Westpac Banking |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |