Correlation Between Commonwealth Bank and WesBanco
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and WesBanco 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 WesBanco 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 WesBanco, you can compare the effects of market volatilities on Commonwealth Bank and WesBanco 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 WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and WesBanco.
Diversification Opportunities for Commonwealth Bank and WesBanco
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commonwealth and WesBanco is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and WesBanco go up and down completely randomly.
Pair Corralation between Commonwealth Bank and WesBanco
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 4.13 times more return on investment than WesBanco. However, Commonwealth Bank is 4.13 times more volatile than WesBanco. It trades about 0.08 of its potential returns per unit of risk. WesBanco is currently generating about 0.19 per unit of risk. If you would invest 9,666 in Commonwealth Bank of on September 12, 2024 and sell it today you would earn a total of 605.00 from holding Commonwealth Bank of or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Commonwealth Bank of vs. WesBanco
Performance |
| Timeline |
| Commonwealth Bank |
| WesBanco |
Commonwealth Bank and WesBanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and WesBanco
The main advantage of trading using opposite Commonwealth Bank and WesBanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, WesBanco 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 WesBanco will offset losses from the drop in WesBanco'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 |
| WesBanco vs. Kontoor Brands | WesBanco vs. Ralph Lauren Corp | WesBanco vs. Nike Inc | WesBanco vs. Vita Coco |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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