Correlation Between Commonwealth Bank and Strickland Metals
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Strickland 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 Strickland 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 Strickland Metals, you can compare the effects of market volatilities on Commonwealth Bank and Strickland 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 Strickland Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Strickland Metals.
Diversification Opportunities for Commonwealth Bank and Strickland Metals
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Strickland is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Strickland Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strickland 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 Strickland Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strickland Metals has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Strickland Metals go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Strickland Metals
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 31.27 times less return on investment than Strickland Metals. But when comparing it to its historical volatility, Commonwealth Bank of is 6.85 times less risky than Strickland Metals. It trades about 0.02 of its potential returns per unit of risk. Strickland Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7.60 in Strickland Metals on September 1, 2024 and sell it today you would earn a total of 0.40 from holding Strickland Metals or generate 5.26% 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. Strickland Metals
Performance |
| Timeline |
| Commonwealth Bank |
| Strickland Metals |
Commonwealth Bank and Strickland Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Strickland Metals
The main advantage of trading using opposite Commonwealth Bank and Strickland Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Strickland 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 Strickland Metals will offset losses from the drop in Strickland Metals' long position.| Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. Commonwealth Bank | Commonwealth Bank vs. Commonwealth Bank of | Commonwealth Bank vs. Commonwealth Bank of |
| Strickland Metals vs. Australian Unity Office | Strickland Metals vs. Red Hill Iron | Strickland Metals vs. Ironbark Capital | Strickland Metals vs. Legacy Iron Ore |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |