Correlation Between Duketon Mining and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Duketon Mining 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 Duketon Mining and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duketon Mining and Commonwealth Bank, you can compare the effects of market volatilities on Duketon Mining 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 Duketon Mining with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duketon Mining and Commonwealth Bank.
Diversification Opportunities for Duketon Mining and Commonwealth Bank
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Duketon and Commonwealth is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Duketon Mining and Commonwealth Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Duketon Mining 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 Duketon 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 Duketon Mining i.e., Duketon Mining and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Duketon Mining and Commonwealth Bank
Assuming the 90 days trading horizon Duketon Mining is expected to under-perform the Commonwealth Bank. In addition to that, Duketon Mining is 4.22 times more volatile than Commonwealth Bank. It trades about -0.03 of its total potential returns per unit of risk. Commonwealth Bank is currently generating about 0.08 per unit of volatility. If you would invest 10,122 in Commonwealth Bank on October 21, 2024 and sell it today you would earn a total of 5,268 from holding Commonwealth Bank or generate 52.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duketon Mining vs. Commonwealth Bank
Performance |
| Timeline |
| Duketon Mining |
| Commonwealth Bank |
Duketon Mining and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duketon Mining and Commonwealth Bank
The main advantage of trading using opposite Duketon Mining and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duketon Mining 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.| Duketon Mining vs. Microequities Asset Management | Duketon Mining vs. Collins Foods | Duketon Mining vs. Cleanaway Waste Management | Duketon Mining vs. Centaurus Metals |
| Commonwealth Bank vs. Charter Hall Retail | Commonwealth Bank vs. Dexus Convenience Retail | Commonwealth Bank vs. IDP Education | Commonwealth Bank vs. Kalgoorlie Gold Mining |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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