Correlation Between Commonwealth Bank and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Allegheny Technologies 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 Allegheny Technologies 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 Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Commonwealth Bank and Allegheny Technologies 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 Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Allegheny Technologies.
Diversification Opportunities for Commonwealth Bank and Allegheny Technologies
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commonwealth and Allegheny is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies 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 Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Allegheny Technologies
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 0.57 times more return on investment than Allegheny Technologies. However, Commonwealth Bank of is 1.75 times less risky than Allegheny Technologies. It trades about 0.08 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.05 per unit of risk. If you would invest 5,845 in Commonwealth Bank of on November 6, 2024 and sell it today you would earn a total of 3,806 from holding Commonwealth Bank of or generate 65.12% 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. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Commonwealth Bank |
| Allegheny Technologies |
Commonwealth Bank and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Allegheny Technologies
The main advantage of trading using opposite Commonwealth Bank and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.| Commonwealth Bank vs. CHINA SOUTHN AIR H | Commonwealth Bank vs. Cal Maine Foods | Commonwealth Bank vs. Performance Food Group | Commonwealth Bank vs. Lifeway Foods |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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