Correlation Between Commonwealth Bank and Wesfarmers
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Wesfarmers 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 Wesfarmers 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 Wesfarmers, you can compare the effects of market volatilities on Commonwealth Bank and Wesfarmers 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 Wesfarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Wesfarmers.
Diversification Opportunities for Commonwealth Bank and Wesfarmers
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commonwealth and Wesfarmers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Wesfarmers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesfarmers 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 Wesfarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesfarmers has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Wesfarmers go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Wesfarmers
If you would invest 6,909 in Wesfarmers on August 29, 2024 and sell it today you would earn a total of 254.00 from holding Wesfarmers or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Commonwealth Bank of vs. Wesfarmers
Performance |
| Timeline |
| Commonwealth Bank |
| Wesfarmers |
Commonwealth Bank and Wesfarmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Wesfarmers
The main advantage of trading using opposite Commonwealth Bank and Wesfarmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Wesfarmers 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 Wesfarmers will offset losses from the drop in Wesfarmers' long position.| Commonwealth Bank vs. Air New Zealand | Commonwealth Bank vs. Australian Unity Office | Commonwealth Bank vs. Charter Hall Education | Commonwealth Bank vs. Aussie Broadband |
| Wesfarmers vs. Mirrabooka Investments | Wesfarmers vs. Garda Diversified Ppty | Wesfarmers vs. Regal Investment | Wesfarmers vs. Diversified United Investment |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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