Correlation Between Commonwealth Global and Snow Capital

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

Diversification Opportunities for Commonwealth Global and Snow Capital

0.79

Correlation Coefficient

Commonwealth Global  Snow Capital

Poor diversification

The 3 months correlation between Commonwealth and Snow is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Snow Capital Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Capital Opportunity 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 Snow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Capital Opportunity has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Snow Capital go up and down completely randomly.

Pair Corralation between Commonwealth Global and Snow Capital

Assuming the 90 days horizon Commonwealth Global Fund is expected to generate 0.94 times more return on investment than Snow Capital. However, Commonwealth Global Fund is 1.06 times less risky than Snow Capital. It trades about 0.03 of its potential returns per unit of risk. Snow Capital Opportunity is currently generating about 0.03 per unit of risk. If you would invest  1,833  in Commonwealth Global Fund on October 23, 2024 and sell it today you would earn a total of  217.00  from holding Commonwealth Global Fund or generate 11.84% return on investment over 90 days.

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

Commonwealth Global Fund  vs.  Snow Capital Opportunity

Commonwealth Global

Risk-Adjusted Performance

0 of 100

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 fairly strong essential indicators, Commonwealth Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Snow Capital Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snow Capital Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Snow Capital 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 Snow Capital

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

The idea behind Commonwealth Global Fund and Snow Capital Opportunity 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.