Correlation Between Commonwealth Bank and Getty Realty
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Getty Realty 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 Getty Realty 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 Getty Realty, you can compare the effects of market volatilities on Commonwealth Bank and Getty Realty 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 Getty Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Getty Realty.
Diversification Opportunities for Commonwealth Bank and Getty Realty
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commonwealth and Getty is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Getty Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getty Realty 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 Getty Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getty Realty has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Getty Realty go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Getty Realty
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 1.12 times more return on investment than Getty Realty. However, Commonwealth Bank is 1.12 times more volatile than Getty Realty. It trades about 0.38 of its potential returns per unit of risk. Getty Realty is currently generating about 0.05 per unit of risk. If you would invest 9,420 in Commonwealth Bank of on August 28, 2024 and sell it today you would earn a total of 960.00 from holding Commonwealth Bank of or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Getty Realty
Performance |
| Timeline |
| Commonwealth Bank |
| Getty Realty |
Commonwealth Bank and Getty Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Getty Realty
The main advantage of trading using opposite Commonwealth Bank and Getty Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Getty Realty 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 Getty Realty will offset losses from the drop in Getty Realty's long position.| Commonwealth Bank vs. Svenska Handelsbanken PK | Commonwealth Bank vs. ANZ Group Holdings | Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. National Australia Bank |
| Getty Realty vs. Regency Centers | Getty Realty vs. Site Centers Corp | Getty Realty vs. Brixmor Property | Getty Realty vs. Tanger Factory Outlet |
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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