Correlation Between Credit Clear and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Credit Clear and Commonwealth Bank 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 Credit Clear and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Clear and Commonwealth Bank of, you can compare the effects of market volatilities on Credit Clear and Commonwealth Bank 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 Credit Clear with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Clear and Commonwealth Bank.
Diversification Opportunities for Credit Clear and Commonwealth Bank
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Credit and Commonwealth is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Credit Clear and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Credit Clear 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 Credit Clear are associated (or correlated) with Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of Credit Clear i.e., Credit Clear and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Credit Clear and Commonwealth Bank
Assuming the 90 days trading horizon Credit Clear is expected to generate 11.6 times more return on investment than Commonwealth Bank. However, Credit Clear is 11.6 times more volatile than Commonwealth Bank of. It trades about 0.17 of its potential returns per unit of risk. Commonwealth Bank of is currently generating about -0.11 per unit of risk. If you would invest 32.00 in Credit Clear on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Credit Clear or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Clear vs. Commonwealth Bank of
Performance |
| Timeline |
| Credit Clear |
| Commonwealth Bank |
Credit Clear and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Clear and Commonwealth Bank
The main advantage of trading using opposite Credit Clear and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Clear position performs unexpectedly, Commonwealth Bank 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 Commonwealth Bank will offset losses from the drop in Commonwealth Bank's long position.| Credit Clear vs. Westpac Banking | Credit Clear vs. Ecofibre | Credit Clear vs. iShares Global Healthcare | Credit Clear vs. Adriatic Metals Plc |
| Commonwealth Bank vs. Dicker Data | Commonwealth Bank vs. Australian Agricultural | Commonwealth Bank vs. Janison Education Group | Commonwealth Bank vs. Aristocrat Leisure |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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