Correlation Between Commodities Strategy and Commonwealth Global
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy and Commonwealth Global 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 Commodities Strategy and Commonwealth Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and Commonwealth Global Fund, you can compare the effects of market volatilities on Commodities Strategy and Commonwealth Global 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 Commodities Strategy with a short position of Commonwealth Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Commonwealth Global.
Diversification Opportunities for Commodities Strategy and Commonwealth Global
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Commodities and Commonwealth is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Commonwealth Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Global and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Commonwealth Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Global has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Commonwealth Global go up and down completely randomly.
Pair Corralation between Commodities Strategy and Commonwealth Global
Assuming the 90 days horizon Commodities Strategy Fund is expected to under-perform the Commonwealth Global. In addition to that, Commodities Strategy is 1.37 times more volatile than Commonwealth Global Fund. It trades about -0.01 of its total potential returns per unit of risk. Commonwealth Global Fund is currently generating about 0.07 per unit of volatility. If you would invest 2,031 in Commonwealth Global Fund on September 3, 2024 and sell it today you would earn a total of 141.00 from holding Commonwealth Global Fund or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. Commonwealth Global Fund
Performance |
| Timeline |
| Commodities Strategy |
| Commonwealth Global |
Commodities Strategy and Commonwealth Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and Commonwealth Global
The main advantage of trading using opposite Commodities Strategy and Commonwealth Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy position performs unexpectedly, Commonwealth Global 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 Global will offset losses from the drop in Commonwealth Global's long position.The idea behind Commodities Strategy Fund and Commonwealth Global Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |