Correlation Between Commonwealth Bank and Gaming
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Gaming 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 Gaming 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 Gaming and Leisure, you can compare the effects of market volatilities on Commonwealth Bank and Gaming 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 Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Gaming.
Diversification Opportunities for Commonwealth Bank and Gaming
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commonwealth and Gaming is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure 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 Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Gaming go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Gaming
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 1.11 times more return on investment than Gaming. However, Commonwealth Bank is 1.11 times more volatile than Gaming and Leisure. It trades about 0.07 of its potential returns per unit of risk. Gaming and Leisure is currently generating about 0.01 per unit of risk. If you would invest 6,207 in Commonwealth Bank of on October 27, 2024 and sell it today you would earn a total of 3,350 from holding Commonwealth Bank of or generate 53.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Gaming and Leisure
Performance |
| Timeline |
| Commonwealth Bank |
| Gaming and Leisure |
Commonwealth Bank and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Gaming
The main advantage of trading using opposite Commonwealth Bank and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| Commonwealth Bank vs. OPKO HEALTH | Commonwealth Bank vs. NAKED WINES PLC | Commonwealth Bank vs. CLOVER HEALTH INV | Commonwealth Bank vs. ITALIAN WINE BRANDS |
| Gaming vs. Scientific Games | Gaming vs. Media and Games | Gaming vs. COSTCO WHOLESALE CDR | Gaming vs. Ross Stores |
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 CEOs Directory module to screen CEOs from public companies around the world.
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