Correlation Between Coles and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Coles 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 Coles and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coles Group and Commonwealth Bank of, you can compare the effects of market volatilities on Coles 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 Coles with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coles and Commonwealth Bank.
Diversification Opportunities for Coles and Commonwealth Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coles and Commonwealth is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coles Group and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Coles 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 Coles Group 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 Coles i.e., Coles and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Coles and Commonwealth Bank
If you would invest 1,804 in Coles Group on August 29, 2024 and sell it today you would earn a total of 38.00 from holding Coles Group or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Coles Group vs. Commonwealth Bank of
Performance |
| Timeline |
| Coles Group |
| Commonwealth Bank |
Coles and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coles and Commonwealth Bank
The main advantage of trading using opposite Coles and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coles 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.| Coles vs. Aussie Broadband | Coles vs. Duxton Broadacre Farms | Coles vs. Regal Funds Management | Coles vs. EROAD |
| Commonwealth Bank vs. Air New Zealand | Commonwealth Bank vs. Australian Unity Office | Commonwealth Bank vs. Charter Hall Education | Commonwealth Bank vs. Aussie Broadband |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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