Correlation Between Commonwealth Bank and Martifer SGPS
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Martifer SGPS 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 Martifer SGPS 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 Martifer SGPS SA, you can compare the effects of market volatilities on Commonwealth Bank and Martifer SGPS 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 Martifer SGPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Martifer SGPS.
Diversification Opportunities for Commonwealth Bank and Martifer SGPS
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Martifer is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Martifer SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martifer SGPS SA 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 Martifer SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martifer SGPS SA has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Martifer SGPS go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Martifer SGPS
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 0.99 times more return on investment than Martifer SGPS. However, Commonwealth Bank of is 1.01 times less risky than Martifer SGPS. It trades about 0.12 of its potential returns per unit of risk. Martifer SGPS SA is currently generating about 0.05 per unit of risk. If you would invest 8,678 in Commonwealth Bank of on September 14, 2024 and sell it today you would earn a total of 823.00 from holding Commonwealth Bank of or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Martifer SGPS SA
Performance |
| Timeline |
| Commonwealth Bank |
| Martifer SGPS SA |
Commonwealth Bank and Martifer SGPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Martifer SGPS
The main advantage of trading using opposite Commonwealth Bank and Martifer SGPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Martifer SGPS 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 Martifer SGPS will offset losses from the drop in Martifer SGPS's long position.| Commonwealth Bank vs. Agricultural Bank of | Commonwealth Bank vs. Superior Plus Corp | Commonwealth Bank vs. SIVERS SEMICONDUCTORS AB | Commonwealth Bank vs. CHINA HUARONG ENERHD 50 |
| Martifer SGPS vs. Commonwealth Bank of | Martifer SGPS vs. Penta Ocean Construction Co | Martifer SGPS vs. TITAN MACHINERY | Martifer SGPS vs. BANKINTER ADR 2007 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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