Correlation Between Commonwealth Bank and Group 6
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Group 6 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 Group 6 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 Group 6 Metals, you can compare the effects of market volatilities on Commonwealth Bank and Group 6 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 Group 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Group 6.
Diversification Opportunities for Commonwealth Bank and Group 6
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Group is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Group 6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 6 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 Group 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 6 Metals has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Group 6 go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Group 6
If you would invest 2.50 in Group 6 Metals on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Group 6 Metals or generate 0.0% 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. Group 6 Metals
Performance |
| Timeline |
| Commonwealth Bank |
| Group 6 Metals |
Commonwealth Bank and Group 6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Group 6
The main advantage of trading using opposite Commonwealth Bank and Group 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Group 6 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 Group 6 will offset losses from the drop in Group 6'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 |
| Group 6 vs. Northern Star Resources | Group 6 vs. Evolution Mining | Group 6 vs. Bluescope Steel | Group 6 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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