Correlation Between Commonwealth Bank and Western Sierra
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Western Sierra 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 Western Sierra 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 Western Sierra Mining, you can compare the effects of market volatilities on Commonwealth Bank and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Western Sierra.
Diversification Opportunities for Commonwealth Bank and Western Sierra
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Western is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Western Sierra go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Western Sierra
Assuming the 90 days horizon Commonwealth Bank is expected to generate 102.34 times less return on investment than Western Sierra. But when comparing it to its historical volatility, Commonwealth Bank of is 75.06 times less risky than Western Sierra. It trades about 0.07 of its potential returns per unit of risk. Western Sierra Mining is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8.45 in Western Sierra Mining on September 2, 2024 and sell it today you would lose (7.77) from holding Western Sierra Mining or give up 91.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Commonwealth Bank of vs. Western Sierra Mining
Performance |
| Timeline |
| Commonwealth Bank |
| Western Sierra Mining |
Commonwealth Bank and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Western Sierra
The main advantage of trading using opposite Commonwealth Bank and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra's long position.| Commonwealth Bank vs. Bank of America | Commonwealth Bank vs. Bank of America | Commonwealth Bank vs. Bank of America | Commonwealth Bank vs. Bank of America |
| Western Sierra vs. Holloman Energy Corp | Western Sierra vs. cbdMD Inc | Western Sierra vs. Evolus Inc | Western Sierra vs. CV Sciences |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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