Correlation Between Commonwealth Bank and GO2 People

Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and GO2 People 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 GO2 People 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 GO2 People, you can compare the effects of market volatilities on Commonwealth Bank and GO2 People 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 GO2 People. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and GO2 People.

Diversification Opportunities for Commonwealth Bank and GO2 People

0.0

Correlation Coefficient

Commonwealth Bank  GO2 People

Pay attention - limited upside

The 3 months correlation between Commonwealth and GO2 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and GO2 People in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GO2 People 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 GO2 People. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GO2 People has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and GO2 People go up and down completely randomly.

Pair Corralation between Commonwealth Bank and GO2 People

Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 120.61 times less return on investment than GO2 People. But when comparing it to its historical volatility, Commonwealth Bank of is 142.45 times less risky than GO2 People. It trades about 0.06 of its potential returns per unit of risk. GO2 People is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.90  in GO2 People on October 9, 2024 and sell it today you would earn a total of  66.10  from holding GO2 People or generate 7344.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.25%
Values	Daily Returns

Commonwealth Bank of  vs.  GO2 People

Commonwealth Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Bank of are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Commonwealth Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

GO2 People

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GO2 People has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GO2 People is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Commonwealth Bank and GO2 People

The main advantage of trading using opposite Commonwealth Bank and GO2 People positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, GO2 People 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 GO2 People will offset losses from the drop in GO2 People's long position.

The idea behind Commonwealth Bank of and GO2 People pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.