Correlation Between Commonwealth Bank and Flowers Foods
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Flowers Foods 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 Flowers Foods 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 Flowers Foods, you can compare the effects of market volatilities on Commonwealth Bank and Flowers Foods 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 Flowers Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Flowers Foods.
Diversification Opportunities for Commonwealth Bank and Flowers Foods
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Commonwealth and Flowers is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Flowers Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowers Foods 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 Flowers Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowers Foods has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Flowers Foods go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Flowers Foods
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 0.95 times more return on investment than Flowers Foods. However, Commonwealth Bank of is 1.05 times less risky than Flowers Foods. It trades about -0.1 of its potential returns per unit of risk. Flowers Foods is currently generating about -0.2 per unit of risk. If you would invest 9,944 in Commonwealth Bank of on October 26, 2024 and sell it today you would lose (503.00) from holding Commonwealth Bank of or give up 5.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Flowers Foods
Performance |
| Timeline |
| Commonwealth Bank |
| Flowers Foods |
Commonwealth Bank and Flowers Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Flowers Foods
The main advantage of trading using opposite Commonwealth Bank and Flowers Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Flowers Foods 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 Flowers Foods will offset losses from the drop in Flowers Foods' long position.| Commonwealth Bank vs. VIENNA INSURANCE GR | Commonwealth Bank vs. Safety Insurance Group | Commonwealth Bank vs. AEON METALS LTD | Commonwealth Bank vs. Aluminum of |
| Flowers Foods vs. General Mills | Flowers Foods vs. Danone SA | Flowers Foods vs. Hormel Foods | Flowers Foods vs. Kellogg Company |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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