Correlation Between Commonwealth Bank and Corning Incorporated
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Corning Incorporated 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 Corning Incorporated 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 Corning Incorporated, you can compare the effects of market volatilities on Commonwealth Bank and Corning Incorporated 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 Corning Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Corning Incorporated.
Diversification Opportunities for Commonwealth Bank and Corning Incorporated
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Commonwealth and Corning is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated 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 Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Corning Incorporated go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Corning Incorporated
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 0.61 times more return on investment than Corning Incorporated. However, Commonwealth Bank of is 1.63 times less risky than Corning Incorporated. It trades about 0.08 of its potential returns per unit of risk. Corning Incorporated is currently generating about 0.01 per unit of risk. If you would invest 9,330 in Commonwealth Bank of on November 28, 2024 and sell it today you would earn a total of 196.00 from holding Commonwealth Bank of or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Corning Incorporated
Performance |
| Timeline |
| Commonwealth Bank |
| Corning Incorporated |
Commonwealth Bank and Corning Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Corning Incorporated
The main advantage of trading using opposite Commonwealth Bank and Corning Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Corning Incorporated 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 Corning Incorporated will offset losses from the drop in Corning Incorporated's long position.| Commonwealth Bank vs. SHELF DRILLING LTD | Commonwealth Bank vs. CDL INVESTMENT | Commonwealth Bank vs. Lamar Advertising | Commonwealth Bank vs. BORR DRILLING NEW |
| Corning Incorporated vs. AUST AGRICULTURAL | Corning Incorporated vs. CREDIT AGRICOLE | Corning Incorporated vs. Discover Financial Services | Corning Incorporated vs. COREBRIDGE FINANCIAL INC |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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