Correlation Between Commonwealth Global and Bats Series

Can any of the company-specific risk be diversified away by investing in both Commonwealth Global and Bats Series 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 Global and Bats Series into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Commonwealth Global Fund and Bats Series P, you can compare the effects of market volatilities on Commonwealth Global and Bats Series 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 Global with a short position of Bats Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Bats Series.

Diversification Opportunities for Commonwealth Global and Bats Series

-0.68

Correlation Coefficient

Commonwealth Global  Bats Series

Excellent diversification

The 3 months correlation between Commonwealth and Bats is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Bats Series P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bats Series P and Commonwealth Global 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 Global Fund are associated (or correlated) with Bats Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bats Series P has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Bats Series go up and down completely randomly.

Pair Corralation between Commonwealth Global and Bats Series

Assuming the 90 days horizon Commonwealth Global Fund is expected to under-perform the Bats Series. In addition to that, Commonwealth Global is 1.63 times more volatile than Bats Series P. It trades about -0.13 of its total potential returns per unit of risk. Bats Series P is currently generating about 0.1 per unit of volatility. If you would invest  1,011  in Bats Series P on December 2, 2024 and sell it today you would earn a total of  29.00  from holding Bats Series P or generate 2.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Commonwealth Global Fund  vs.  Bats Series P

Commonwealth Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commonwealth Global Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Bats Series P

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bats Series P are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bats Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Commonwealth Global and Bats Series

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

The idea behind Commonwealth Global Fund and Bats Series P 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..