Correlation Between Premier Investments and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Premier Investments 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 Premier Investments and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Investments and Commonwealth Bank of, you can compare the effects of market volatilities on Premier Investments 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 Premier Investments with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Investments and Commonwealth Bank.
Diversification Opportunities for Premier Investments and Commonwealth Bank
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Premier and Commonwealth is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Premier Investments and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Premier Investments 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 Premier Investments 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 Premier Investments i.e., Premier Investments and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Premier Investments and Commonwealth Bank
Assuming the 90 days trading horizon Premier Investments is expected to generate 5.39 times more return on investment than Commonwealth Bank. However, Premier Investments is 5.39 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 2,268 in Premier Investments on September 15, 2024 and sell it today you would earn a total of 1,123 from holding Premier Investments or generate 49.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Investments vs. Commonwealth Bank of
Performance |
| Timeline |
| Premier Investments |
| Commonwealth Bank |
Premier Investments and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Investments and Commonwealth Bank
The main advantage of trading using opposite Premier Investments and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Investments 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.| Premier Investments vs. Global Data Centre | Premier Investments vs. Homeco Daily Needs | Premier Investments vs. Platinum Asset Management | Premier Investments vs. Kneomedia |
| Commonwealth Bank vs. Premier Investments | Commonwealth Bank vs. Platinum Asia Investments | Commonwealth Bank vs. Legacy Iron Ore | Commonwealth Bank vs. Nufarm Finance NZ |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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