Correlation Between De Grey and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both De Grey and Commonwealth Bank 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 De Grey and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Commonwealth Bank of, you can compare the effects of market volatilities on De Grey and Commonwealth Bank 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 De Grey with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Commonwealth Bank.
Diversification Opportunities for De Grey and Commonwealth Bank
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between DEG and Commonwealth is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and De Grey 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 De Grey Mining are associated (or correlated) with Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of De Grey i.e., De Grey and Commonwealth Bank go up and down completely randomly.
Pair Corralation between De Grey and Commonwealth Bank
Assuming the 90 days trading horizon De Grey Mining is expected to generate 8.34 times more return on investment than Commonwealth Bank. However, De Grey is 8.34 times more volatile than Commonwealth Bank of. It trades about 0.04 of its potential returns per unit of risk. Commonwealth Bank of is currently generating about 0.09 per unit of risk. If you would invest 126.00 in De Grey Mining on September 14, 2024 and sell it today you would earn a total of 69.00 from holding De Grey Mining or generate 54.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.71% |
| Values | Daily Returns |
De Grey Mining vs. Commonwealth Bank of
Performance |
| Timeline |
| De Grey Mining |
| Commonwealth Bank |
De Grey and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Commonwealth Bank
The main advantage of trading using opposite De Grey and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, Commonwealth Bank 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 Commonwealth Bank will offset losses from the drop in Commonwealth Bank's long position.| De Grey vs. Northern Star Resources | De Grey vs. Evolution Mining | De Grey vs. Bluescope Steel | De Grey vs. Sandfire Resources NL |
| Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. De Grey Mining | Commonwealth Bank vs. Pointsbet Holdings | Commonwealth Bank vs. Indiana Resources |
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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