Correlation Between Commonwealth Bank and Star Entertainment
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Star Entertainment 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 Star Entertainment 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 Star Entertainment Group, you can compare the effects of market volatilities on Commonwealth Bank and Star Entertainment 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 Star Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Star Entertainment.
Diversification Opportunities for Commonwealth Bank and Star Entertainment
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and Star is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Star Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Entertainment 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 Star Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Entertainment has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Star Entertainment go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Star Entertainment
Assuming the 90 days trading horizon Commonwealth Bank of is expected to generate 0.03 times more return on investment than Star Entertainment. However, Commonwealth Bank of is 29.02 times less risky than Star Entertainment. It trades about 0.05 of its potential returns per unit of risk. Star Entertainment Group is currently generating about -0.19 per unit of risk. If you would invest 10,198 in Commonwealth Bank of on October 12, 2024 and sell it today you would earn a total of 32.00 from holding Commonwealth Bank of or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Star Entertainment Group
Performance |
| Timeline |
| Commonwealth Bank |
| Star Entertainment |
Commonwealth Bank and Star Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Star Entertainment
The main advantage of trading using opposite Commonwealth Bank and Star Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Star Entertainment 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 Star Entertainment will offset losses from the drop in Star Entertainment's long position.| Commonwealth Bank vs. Home Consortium | Commonwealth Bank vs. Aussie Broadband | Commonwealth Bank vs. Treasury Wine Estates | Commonwealth Bank vs. Sports Entertainment Group |
| Star Entertainment vs. Medibank Private | Star Entertainment vs. Westpac Banking | Star Entertainment vs. Commonwealth Bank of | Star Entertainment vs. Event Hospitality and |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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