Correlation Between Regal Funds and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Regal Funds 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 Regal Funds and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Funds Management and Commonwealth Bank of, you can compare the effects of market volatilities on Regal Funds 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 Regal Funds with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Funds and Commonwealth Bank.
Diversification Opportunities for Regal Funds and Commonwealth Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regal and Commonwealth is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Regal Funds Management and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Regal Funds 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 Regal Funds Management 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 Regal Funds i.e., Regal Funds and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Regal Funds and Commonwealth Bank
Assuming the 90 days trading horizon Regal Funds Management is expected to generate 8.32 times more return on investment than Commonwealth Bank. However, Regal Funds is 8.32 times more volatile than Commonwealth Bank of. It trades about 0.02 of its potential returns per unit of risk. Commonwealth Bank of is currently generating about 0.04 per unit of risk. If you would invest 330.00 in Regal Funds Management on September 12, 2024 and sell it today you would earn a total of 53.00 from holding Regal Funds Management or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Funds Management vs. Commonwealth Bank of
Performance |
| Timeline |
| Regal Funds Management |
| Commonwealth Bank |
Regal Funds and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Funds and Commonwealth Bank
The main advantage of trading using opposite Regal Funds and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Funds 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.| Regal Funds vs. Medibank Private | Regal Funds vs. Black Rock Mining | Regal Funds vs. Duxton Broadacre Farms | Regal Funds vs. Finexia Financial Group |
| Commonwealth Bank vs. Farm Pride Foods | Commonwealth Bank vs. Treasury Wine Estates | Commonwealth Bank vs. Strickland Metals | Commonwealth Bank vs. Regal Funds Management |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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