Correlation Between Sable Offshore and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Sable Offshore 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 Sable Offshore and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sable Offshore Corp and Commonwealth Bank of, you can compare the effects of market volatilities on Sable Offshore 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 Sable Offshore with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Commonwealth Bank.
Diversification Opportunities for Sable Offshore and Commonwealth Bank
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sable and Commonwealth is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Sable Offshore 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 Sable Offshore Corp 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 Sable Offshore i.e., Sable Offshore and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Sable Offshore and Commonwealth Bank
Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 2.23 times more return on investment than Commonwealth Bank. However, Sable Offshore is 2.23 times more volatile than Commonwealth Bank of. It trades about 0.07 of its potential returns per unit of risk. Commonwealth Bank of is currently generating about 0.07 per unit of risk. If you would invest 1,003 in Sable Offshore Corp on September 3, 2024 and sell it today you would earn a total of 1,345 from holding Sable Offshore Corp or generate 134.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.55% |
| Values | Daily Returns |
Sable Offshore Corp vs. Commonwealth Bank of
Performance |
| Timeline |
| Sable Offshore Corp |
| Commonwealth Bank |
Sable Offshore and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sable Offshore and Commonwealth Bank
The main advantage of trading using opposite Sable Offshore and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore 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.| Sable Offshore vs. Dine Brands Global | Sable Offshore vs. RCI Hospitality Holdings | Sable Offshore vs. Sweetgreen | Sable Offshore vs. Dennys Corp |
| Commonwealth Bank vs. Svenska Handelsbanken PK | Commonwealth Bank vs. ANZ Group Holdings | Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. National Australia Bank |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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