Correlation Between Svenska Handelsbanken and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken 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 Svenska Handelsbanken and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Handelsbanken PK and Commonwealth Bank of, you can compare the effects of market volatilities on Svenska Handelsbanken 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 Svenska Handelsbanken with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Commonwealth Bank.
Diversification Opportunities for Svenska Handelsbanken and Commonwealth Bank
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Svenska and Commonwealth is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken PK and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Svenska Handelsbanken 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 Svenska Handelsbanken PK 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 Svenska Handelsbanken i.e., Svenska Handelsbanken and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Commonwealth Bank
Assuming the 90 days horizon Svenska Handelsbanken PK is expected to under-perform the Commonwealth Bank. But the pink sheet apears to be less risky and, when comparing its historical volatility, Svenska Handelsbanken PK is 1.19 times less risky than Commonwealth Bank. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Commonwealth Bank of is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 9,420 in Commonwealth Bank of on August 27, 2024 and sell it today you would earn a total of 960.00 from holding Commonwealth Bank of or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken PK vs. Commonwealth Bank of
Performance |
| Timeline |
| Svenska Handelsbanken |
| Commonwealth Bank |
Svenska Handelsbanken and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Commonwealth Bank
The main advantage of trading using opposite Svenska Handelsbanken and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken 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.| Svenska Handelsbanken vs. China Construction Bank | Svenska Handelsbanken vs. Industrial and Commercial | Svenska Handelsbanken vs. Bank of America | Svenska Handelsbanken vs. Bank of America |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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