Correlation Between Commonwealth Bank and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and SalMar ASA 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 SalMar ASA 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 SalMar ASA, you can compare the effects of market volatilities on Commonwealth Bank and SalMar ASA 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 SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and SalMar ASA.
Diversification Opportunities for Commonwealth Bank and SalMar ASA
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commonwealth and SalMar is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and SalMar ASA go up and down completely randomly.
Pair Corralation between Commonwealth Bank and SalMar ASA
Assuming the 90 days horizon Commonwealth Bank is expected to generate 2.08 times less return on investment than SalMar ASA. But when comparing it to its historical volatility, Commonwealth Bank of is 3.88 times less risky than SalMar ASA. It trades about 0.12 of its potential returns per unit of risk. SalMar ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,951 in SalMar ASA on August 31, 2024 and sell it today you would earn a total of 2,997 from holding SalMar ASA or generate 153.61% 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. SalMar ASA
Performance |
| Timeline |
| Commonwealth Bank |
| SalMar ASA |
Commonwealth Bank and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and SalMar ASA
The main advantage of trading using opposite Commonwealth Bank and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, SalMar ASA 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 SalMar ASA will offset losses from the drop in SalMar ASA's long position.| Commonwealth Bank vs. Agricultural Bank of | Commonwealth Bank vs. Bank of China | Commonwealth Bank vs. Superior Plus Corp | Commonwealth Bank vs. NMI Holdings |
| SalMar ASA vs. Live Nation Entertainment | SalMar ASA vs. International Consolidated Airlines | SalMar ASA vs. TOWNSQUARE MEDIA INC | SalMar ASA vs. ITALIAN WINE BRANDS |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |