Correlation Between Commonwealth Bank and Dicker Data
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Dicker Data 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 Commonwealth Bank and Dicker Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Dicker Data, you can compare the effects of market volatilities on Commonwealth Bank and Dicker Data 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 Commonwealth Bank with a short position of Dicker Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Dicker Data.
Diversification Opportunities for Commonwealth Bank and Dicker Data
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commonwealth and Dicker is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Dicker Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicker Data and Commonwealth Bank 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 Commonwealth Bank are associated (or correlated) with Dicker Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicker Data has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Dicker Data go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Dicker Data
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.85 times more return on investment than Dicker Data. However, Commonwealth Bank is 1.18 times less risky than Dicker Data. It trades about 0.14 of its potential returns per unit of risk. Dicker Data is currently generating about -0.06 per unit of risk. If you would invest 14,296 in Commonwealth Bank on September 12, 2024 and sell it today you would earn a total of 1,467 from holding Commonwealth Bank or generate 10.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Commonwealth Bank vs. Dicker Data
Performance |
Timeline |
Commonwealth Bank |
Dicker Data |
Commonwealth Bank and Dicker Data Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Commonwealth Bank and Dicker Data
The main advantage of trading using opposite Commonwealth Bank and Dicker Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Dicker Data 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 Dicker Data will offset losses from the drop in Dicker Data's long position.Commonwealth Bank vs. Aristocrat Leisure | Commonwealth Bank vs. Hawsons Iron | Commonwealth Bank vs. Red Hill Iron | Commonwealth Bank vs. Legacy Iron Ore |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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