Correlation Between Siriuspoint and Commonwealth Bank

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

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

Diversification Opportunities for Siriuspoint and Commonwealth Bank

0.87

Correlation Coefficient

Siriuspoint  Commonwealth Bank

Very poor diversification

The 3 months correlation between Siriuspoint and Commonwealth is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Siriuspoint and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Siriuspoint 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 Siriuspoint 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 Siriuspoint i.e., Siriuspoint and Commonwealth Bank go up and down completely randomly.

Pair Corralation between Siriuspoint and Commonwealth Bank

Given the investment horizon of 90 days Siriuspoint is expected to under-perform the Commonwealth Bank. But the stock apears to be less risky and, when comparing its historical volatility, Siriuspoint is 1.17 times less risky than Commonwealth Bank. The stock trades about -0.18 of its potential returns per unit of risk. The Commonwealth Bank of is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  10,162  in Commonwealth Bank of on September 21, 2024 and sell it today you would lose (387.00) from holding Commonwealth Bank of or give up 3.81% of portfolio value over 90 days.

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

Siriuspoint  vs.  Commonwealth Bank of

Siriuspoint

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Siriuspoint is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Commonwealth Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commonwealth Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Commonwealth Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Siriuspoint and Commonwealth Bank

The main advantage of trading using opposite Siriuspoint and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siriuspoint 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 Siriuspoint 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.