Correlation Between Commonwealth Bank and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Bunzl Plc 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 Bunzl Plc 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 Bunzl plc, you can compare the effects of market volatilities on Commonwealth Bank and Bunzl Plc 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 Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Bunzl Plc.
Diversification Opportunities for Commonwealth Bank and Bunzl Plc
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commonwealth and Bunzl is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc 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 Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Bunzl Plc go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Bunzl Plc
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 1.44 times more return on investment than Bunzl Plc. However, Commonwealth Bank is 1.44 times more volatile than Bunzl plc. It trades about 0.41 of its potential returns per unit of risk. Bunzl plc is currently generating about 0.19 per unit of risk. If you would invest 8,662 in Commonwealth Bank of on September 1, 2024 and sell it today you would earn a total of 1,144 from holding Commonwealth Bank of or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Bunzl plc
Performance |
| Timeline |
| Commonwealth Bank |
| Bunzl plc |
Commonwealth Bank and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Bunzl Plc
The main advantage of trading using opposite Commonwealth Bank and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Bunzl Plc 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| Commonwealth Bank vs. Playtech plc | Commonwealth Bank vs. CANON MARKETING JP | Commonwealth Bank vs. Carsales | Commonwealth Bank vs. Lion Biotechnologies |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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