Correlation Between Commerzbank and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Commerzbank and Standard 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 Commerzbank and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and Standard Bank Group, you can compare the effects of market volatilities on Commerzbank and Standard 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 Commerzbank with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and Standard Bank.
Diversification Opportunities for Commerzbank and Standard Bank
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commerzbank and Standard is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group and Commerzbank 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 Commerzbank AG are associated (or correlated) with Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Commerzbank i.e., Commerzbank and Standard Bank go up and down completely randomly.
Pair Corralation between Commerzbank and Standard Bank
Assuming the 90 days horizon Commerzbank AG is expected to generate 1.5 times more return on investment than Standard Bank. However, Commerzbank is 1.5 times more volatile than Standard Bank Group. It trades about 0.09 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.07 per unit of risk. If you would invest 1,160 in Commerzbank AG on August 26, 2024 and sell it today you would earn a total of 640.00 from holding Commerzbank AG or generate 55.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 56.76% |
| Values | Daily Returns |
Commerzbank AG vs. Standard Bank Group
Performance |
| Timeline |
| Commerzbank AG |
| Standard Bank Group |
Commerzbank and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and Standard Bank
The main advantage of trading using opposite Commerzbank and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank position performs unexpectedly, Standard 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 Standard Bank will offset losses from the drop in Standard Bank's long position.| Commerzbank vs. Standard Bank Group | Commerzbank vs. PSB Holdings | Commerzbank vs. United Overseas Bank | Commerzbank vs. Turkiye Garanti Bankasi |
| Standard Bank vs. PSB Holdings | Standard Bank vs. United Overseas Bank | Standard Bank vs. Turkiye Garanti Bankasi |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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