Correlation Between Navigator Global and Commonwealth Bank

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

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

Diversification Opportunities for Navigator Global and Commonwealth Bank

0.32

Correlation Coefficient

Navigator Global  Commonwealth Bank

Weak diversification

The 3 months correlation between Navigator and Commonwealth is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Global Investments and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Navigator 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 Navigator Global Investments are associated (or correlated) with Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of Navigator Global i.e., Navigator Global and Commonwealth Bank go up and down completely randomly.

Pair Corralation between Navigator Global and Commonwealth Bank

Assuming the 90 days trading horizon Navigator Global Investments is expected to generate 6.74 times more return on investment than Commonwealth Bank. However, Navigator Global is 6.74 times more volatile than Commonwealth Bank of. It trades about 0.05 of its potential returns per unit of risk. Commonwealth Bank of is currently generating about 0.0 per unit of risk. If you would invest  165.00  in Navigator Global Investments on October 7, 2024 and sell it today you would earn a total of  6.00  from holding Navigator Global Investments or generate 3.64% return on investment over 90 days.

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

Navigator Global Investments  vs.  Commonwealth Bank of

Navigator Global Inv

Risk-Adjusted Performance

0 of 100

Very Weak

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

Commonwealth Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Bank of are ranked lower than 2 (%) 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.

Pair Trading with Navigator Global and Commonwealth Bank

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

The idea behind Navigator Global Investments and Commonwealth Bank of 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.