Correlation Between Commonwealth Bank and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Whitehaven Coal 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 Whitehaven Coal 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 Whitehaven Coal, you can compare the effects of market volatilities on Commonwealth Bank and Whitehaven Coal 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 Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Whitehaven Coal.
Diversification Opportunities for Commonwealth Bank and Whitehaven Coal
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and Whitehaven is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Whitehaven Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal 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 Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Whitehaven Coal go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Whitehaven Coal
Assuming the 90 days trading horizon Commonwealth Bank of is expected to generate 0.12 times more return on investment than Whitehaven Coal. However, Commonwealth Bank of is 8.37 times less risky than Whitehaven Coal. It trades about -0.03 of its potential returns per unit of risk. Whitehaven Coal is currently generating about -0.05 per unit of risk. If you would invest 10,242 in Commonwealth Bank of on November 3, 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. Whitehaven Coal
Performance |
| Timeline |
| Commonwealth Bank |
| Whitehaven Coal |
Commonwealth Bank and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Whitehaven Coal
The main advantage of trading using opposite Commonwealth Bank and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Whitehaven Coal 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| Commonwealth Bank vs. Neurotech International | Commonwealth Bank vs. Galena Mining | Commonwealth Bank vs. Complii FinTech Solutions | Commonwealth Bank vs. Talisman Mining |
| Whitehaven Coal vs. Regis Healthcare | Whitehaven Coal vs. Dicker Data | Whitehaven Coal vs. Iron Road | Whitehaven Coal vs. Bluescope Steel |
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.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |