Correlation Between Commonwealth Bank and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Southern Cross 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 Southern Cross 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 Southern Cross Media, you can compare the effects of market volatilities on Commonwealth Bank and Southern Cross 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 Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Southern Cross.
Diversification Opportunities for Commonwealth Bank and Southern Cross
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commonwealth and Southern is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Southern Cross Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Media 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 Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Media has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Southern Cross go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Southern Cross
Assuming the 90 days trading horizon Commonwealth Bank of is expected to generate 0.12 times more return on investment than Southern Cross. However, Commonwealth Bank of is 8.49 times less risky than Southern Cross. It trades about 0.09 of its potential returns per unit of risk. Southern Cross Media is currently generating about -0.03 per unit of risk. If you would invest 9,291 in Commonwealth Bank of on October 11, 2024 and sell it today you would earn a total of 1,202 from holding Commonwealth Bank of or generate 12.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.92% |
| Values | Daily Returns |
Commonwealth Bank of vs. Southern Cross Media
Performance |
| Timeline |
| Commonwealth Bank |
| Southern Cross Media |
Commonwealth Bank and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Southern Cross
The main advantage of trading using opposite Commonwealth Bank and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.| Commonwealth Bank vs. Australian Strategic Materials | Commonwealth Bank vs. Ainsworth Game Technology | Commonwealth Bank vs. Global Health | Commonwealth Bank vs. Gold Road Resources |
| Southern Cross vs. Aneka Tambang Tbk | Southern Cross vs. Commonwealth Bank | Southern Cross vs. Commonwealth Bank of | Southern Cross vs. Australia and New |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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