Correlation Between Commonwealth Bank and X2M Connect
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and X2M Connect 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 X2M Connect 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 X2M Connect, you can compare the effects of market volatilities on Commonwealth Bank and X2M Connect 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 X2M Connect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and X2M Connect.
Diversification Opportunities for Commonwealth Bank and X2M Connect
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and X2M is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and X2M Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X2M Connect 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 X2M Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X2M Connect has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and X2M Connect go up and down completely randomly.
Pair Corralation between Commonwealth Bank and X2M Connect
Assuming the 90 days trading horizon Commonwealth Bank of is expected to generate 0.4 times more return on investment than X2M Connect. However, Commonwealth Bank of is 2.47 times less risky than X2M Connect. It trades about -0.02 of its potential returns per unit of risk. X2M Connect is currently generating about -0.21 per unit of risk. If you would invest 10,595 in Commonwealth Bank of on September 2, 2024 and sell it today you would lose (15.00) from holding Commonwealth Bank of or give up 0.14% 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. X2M Connect
Performance |
| Timeline |
| Commonwealth Bank |
| X2M Connect |
Commonwealth Bank and X2M Connect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and X2M Connect
The main advantage of trading using opposite Commonwealth Bank and X2M Connect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, X2M Connect 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 X2M Connect will offset losses from the drop in X2M Connect's long position.| Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. Imricor Medical Systems | Commonwealth Bank vs. Midway | Commonwealth Bank vs. Aristocrat Leisure |
| X2M Connect vs. Aneka Tambang Tbk | X2M Connect vs. Commonwealth Bank | X2M Connect vs. Commonwealth Bank of | X2M Connect 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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