Correlation Between Stereo Vision and Commonwealth Bank

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

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

Diversification Opportunities for Stereo Vision and Commonwealth Bank

0.1

Correlation Coefficient

Stereo Vision  Commonwealth Bank

Average diversification

The 3 months correlation between Stereo and Commonwealth is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Stereo Vision Entertainment and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Stereo Vision 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 Stereo Vision Entertainment 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 Stereo Vision i.e., Stereo Vision and Commonwealth Bank go up and down completely randomly.

Pair Corralation between Stereo Vision and Commonwealth Bank

Given the investment horizon of 90 days Stereo Vision Entertainment is expected to under-perform the Commonwealth Bank. In addition to that, Stereo Vision is 1.95 times more volatile than Commonwealth Bank of. It trades about -0.04 of its total potential returns per unit of risk. Commonwealth Bank of is currently generating about 0.1 per unit of volatility. If you would invest  6,235  in Commonwealth Bank of on September 30, 2024 and sell it today you would earn a total of  3,447  from holding Commonwealth Bank of or generate 55.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Stereo Vision Entertainment  vs.  Commonwealth Bank of

Stereo Vision Entert

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stereo Vision Entertainment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish basic indicators, Stereo Vision may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. 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 Stereo Vision and Commonwealth Bank

The main advantage of trading using opposite Stereo Vision and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stereo Vision 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 Stereo Vision Entertainment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.