Correlation Between Commonwealth Bank and Centrex Metals
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Centrex Metals 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 Centrex Metals 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 Centrex Metals, you can compare the effects of market volatilities on Commonwealth Bank and Centrex Metals 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 Centrex Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Centrex Metals.
Diversification Opportunities for Commonwealth Bank and Centrex Metals
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and Centrex is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Centrex Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrex Metals 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 Centrex Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrex Metals has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Centrex Metals go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Centrex Metals
Assuming the 90 days trading horizon Commonwealth Bank of is expected to generate 0.08 times more return on investment than Centrex Metals. However, Commonwealth Bank of is 12.67 times less risky than Centrex Metals. It trades about -0.02 of its potential returns per unit of risk. Centrex Metals is currently generating about -0.31 per unit of risk. If you would invest 10,295 in Commonwealth Bank of on September 29, 2024 and sell it today you would lose (17.00) from holding Commonwealth Bank of or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Centrex Metals
Performance |
| Timeline |
| Commonwealth Bank |
| Centrex Metals |
Commonwealth Bank and Centrex Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Centrex Metals
The main advantage of trading using opposite Commonwealth Bank and Centrex Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Centrex Metals 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 Centrex Metals will offset losses from the drop in Centrex Metals' long position.| Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. Commonwealth Bank | Commonwealth Bank vs. Commonwealth Bank of | Commonwealth Bank vs. National Australia Bank |
| Centrex Metals vs. Neurotech International | Centrex Metals vs. Magellan Financial Group | Centrex Metals vs. National Australia Bank | Centrex Metals vs. Ainsworth Game Technology |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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