Correlation Between Commonwealth Bank and Black Rock
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Black Rock 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 Black Rock 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 Black Rock Mining, you can compare the effects of market volatilities on Commonwealth Bank and Black Rock 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 Black Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Black Rock.
Diversification Opportunities for Commonwealth Bank and Black Rock
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Black is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Black Rock Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Rock Mining 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 Black Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Rock Mining has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Black Rock go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Black Rock
Assuming the 90 days trading horizon Commonwealth Bank of is expected to generate 0.14 times more return on investment than Black Rock. However, Commonwealth Bank of is 7.32 times less risky than Black Rock. It trades about 0.08 of its potential returns per unit of risk. Black Rock Mining is currently generating about -0.05 per unit of risk. If you would invest 9,965 in Commonwealth Bank of on August 28, 2024 and sell it today you would earn a total of 405.00 from holding Commonwealth Bank of or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Commonwealth Bank of vs. Black Rock Mining
Performance |
| Timeline |
| Commonwealth Bank |
| Black Rock Mining |
Commonwealth Bank and Black Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Black Rock
The main advantage of trading using opposite Commonwealth Bank and Black Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Black Rock 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 Black Rock will offset losses from the drop in Black Rock's long position.| Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. Commonwealth Bank | Commonwealth Bank vs. National Australia Bank | Commonwealth Bank vs. Westpac Banking Corp |
| Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. Sandfire Resources NL |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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