Correlation Between Finexia Financial and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Finexia Financial 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 Finexia Financial and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finexia Financial Group and Commonwealth Bank of, you can compare the effects of market volatilities on Finexia Financial 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 Finexia Financial with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finexia Financial and Commonwealth Bank.
Diversification Opportunities for Finexia Financial and Commonwealth Bank
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Finexia and Commonwealth is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Finexia Financial Group and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Finexia Financial 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 Finexia Financial Group 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 Finexia Financial i.e., Finexia Financial and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Finexia Financial and Commonwealth Bank
Assuming the 90 days trading horizon Finexia Financial Group is expected to generate 11.71 times more return on investment than Commonwealth Bank. However, Finexia Financial is 11.71 times more volatile than Commonwealth Bank of. It trades about 0.06 of its potential returns per unit of risk. Commonwealth Bank of is currently generating about 0.06 per unit of risk. If you would invest 23.00 in Finexia Financial Group on August 27, 2024 and sell it today you would earn a total of 9.00 from holding Finexia Financial Group or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finexia Financial Group vs. Commonwealth Bank of
Performance |
| Timeline |
| Finexia Financial |
| Commonwealth Bank |
Finexia Financial and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finexia Financial and Commonwealth Bank
The main advantage of trading using opposite Finexia Financial and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finexia Financial 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.| Finexia Financial vs. Renascor Resources | Finexia Financial vs. Venus Metals | Finexia Financial vs. Havilah Resources | Finexia Financial vs. Asara Resources |
| Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. Commonwealth Bank | Commonwealth Bank vs. National Australia Bank | Commonwealth Bank vs. Westpac Banking Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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