Correlation Between Commonwealth Bank and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Aurelia Metals 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 Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and Aurelia Metals, you can compare the effects of market volatilities on Commonwealth Bank and Aurelia Metals 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 Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Aurelia Metals.
Diversification Opportunities for Commonwealth Bank and Aurelia Metals
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Aurelia is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals 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 of are associated (or correlated) with Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Aurelia Metals go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Aurelia Metals
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 12.28 times less return on investment than Aurelia Metals. But when comparing it to its historical volatility, Commonwealth Bank of is 11.95 times less risky than Aurelia Metals. It trades about 0.06 of its potential returns per unit of risk. Aurelia Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Aurelia Metals on October 7, 2024 and sell it today you would earn a total of 6.00 from holding Aurelia Metals or generate 50.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Commonwealth Bank of vs. Aurelia Metals
Performance |
Timeline |
Commonwealth Bank |
Aurelia Metals |
Commonwealth Bank and Aurelia Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Commonwealth Bank and Aurelia Metals
The main advantage of trading using opposite Commonwealth Bank and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Aurelia Metals 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. Commonwealth Bank | Commonwealth Bank vs. Commonwealth Bank of | Commonwealth Bank vs. Commonwealth Bank of |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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