Correlation Between Commonwealth Bank and Global Health
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Global Health 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 Global Health 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 Global Health, you can compare the effects of market volatilities on Commonwealth Bank and Global Health 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 Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Global Health.
Diversification Opportunities for Commonwealth Bank and Global Health
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Commonwealth and Global is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health 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 Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Global Health go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Global Health
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 4.21 times less return on investment than Global Health. But when comparing it to its historical volatility, Commonwealth Bank of is 18.22 times less risky than Global Health. It trades about 0.04 of its potential returns per unit of risk. Global Health is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Global Health on September 12, 2024 and sell it today you would lose (7.00) from holding Global Health or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Global Health
Performance |
| Timeline |
| Commonwealth Bank |
| Global Health |
Commonwealth Bank and Global Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Global Health
The main advantage of trading using opposite Commonwealth Bank and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Global Health 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 Global Health will offset losses from the drop in Global Health's long position.| Commonwealth Bank vs. Farm Pride Foods | Commonwealth Bank vs. Treasury Wine Estates | Commonwealth Bank vs. Strickland Metals | Commonwealth Bank vs. Regal Funds Management |
| Global Health vs. CSL | Global Health vs. Tamawood | Global Health vs. Cochlear | Global Health vs. Rea Group |
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.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |