Correlation Between Super Retail and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Super Retail 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 Super Retail and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Super Retail Group and Commonwealth Bank of, you can compare the effects of market volatilities on Super Retail 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 Super Retail with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and Commonwealth Bank.
Diversification Opportunities for Super Retail and Commonwealth Bank
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Super and Commonwealth is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail 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 Super Retail 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 Super Retail 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 Super Retail i.e., Super Retail and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Super Retail and Commonwealth Bank
Assuming the 90 days trading horizon Super Retail Group is expected to under-perform the Commonwealth Bank. In addition to that, Super Retail is 3.93 times more volatile than Commonwealth Bank of. It trades about -0.08 of its total potential returns per unit of risk. Commonwealth Bank of is currently generating about 0.14 per unit of volatility. If you would invest 10,435 in Commonwealth Bank of on October 22, 2024 and sell it today you would earn a total of 60.00 from holding Commonwealth Bank of or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Super Retail Group vs. Commonwealth Bank of
Performance |
| Timeline |
| Super Retail Group |
| Commonwealth Bank |
Super Retail and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Retail and Commonwealth Bank
The main advantage of trading using opposite Super Retail and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail 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.| Super Retail vs. Bailador Technology Invest | Super Retail vs. Farm Pride Foods | Super Retail vs. WiseTech Global Limited | Super Retail vs. Pinnacle Investment Management |
| Commonwealth Bank vs. Ironbark Capital | Commonwealth Bank vs. Iron Road | Commonwealth Bank vs. Bio Gene Technology | Commonwealth Bank vs. Super Retail Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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