Correlation Between Commonwealth Bank and Magnetic Resources
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Magnetic Resources 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 Magnetic Resources 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 Magnetic Resources NL, you can compare the effects of market volatilities on Commonwealth Bank and Magnetic Resources 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 Magnetic Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Magnetic Resources.
Diversification Opportunities for Commonwealth Bank and Magnetic Resources
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commonwealth and Magnetic is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Magnetic Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnetic Resources 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 Magnetic Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnetic Resources has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Magnetic Resources go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Magnetic Resources
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 6.5 times less return on investment than Magnetic Resources. But when comparing it to its historical volatility, Commonwealth Bank of is 8.43 times less risky than Magnetic Resources. It trades about 0.05 of its potential returns per unit of risk. Magnetic Resources NL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 108.00 in Magnetic Resources NL on August 30, 2024 and sell it today you would earn a total of 12.00 from holding Magnetic Resources NL or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Magnetic Resources NL
Performance |
| Timeline |
| Commonwealth Bank |
| Magnetic Resources |
Commonwealth Bank and Magnetic Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Magnetic Resources
The main advantage of trading using opposite Commonwealth Bank and Magnetic Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Magnetic Resources 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 Magnetic Resources will offset losses from the drop in Magnetic Resources' long position.| Commonwealth Bank vs. Queste Communications | Commonwealth Bank vs. EMvision Medical Devices | Commonwealth Bank vs. Flagship Investments | Commonwealth Bank vs. Actinogen Medical |
| Magnetic Resources vs. Data3 | Magnetic Resources vs. BTC Health Limited | Magnetic Resources vs. Homeco Daily Needs | Magnetic Resources vs. Healthco Healthcare 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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