Correlation Between Commonwealth Bank and Sequoia Financial
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Sequoia Financial 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 Bank and Sequoia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Sequoia Financial Group, you can compare the effects of market volatilities on Commonwealth Bank and Sequoia Financial 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 Bank with a short position of Sequoia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Sequoia Financial.
Diversification Opportunities for Commonwealth Bank and Sequoia Financial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and Sequoia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Sequoia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia Financial and Commonwealth Bank 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 Bank are associated (or correlated) with Sequoia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia Financial has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Sequoia Financial go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Sequoia Financial
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 0.42 times more return on investment than Sequoia Financial. However, Commonwealth Bank is 2.38 times less risky than Sequoia Financial. It trades about 0.09 of its potential returns per unit of risk. Sequoia Financial Group is currently generating about -0.01 per unit of risk. If you would invest 9,319 in Commonwealth Bank on September 24, 2024 and sell it today you would earn a total of 5,707 from holding Commonwealth Bank or generate 61.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Commonwealth Bank vs. Sequoia Financial Group
Performance |
Timeline |
Commonwealth Bank |
Sequoia Financial |
Commonwealth Bank and Sequoia Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Commonwealth Bank and Sequoia Financial
The main advantage of trading using opposite Commonwealth Bank and Sequoia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Sequoia Financial 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 Sequoia Financial will offset losses from the drop in Sequoia Financial's long position.Commonwealth Bank vs. Global Health | Commonwealth Bank vs. Fisher Paykel Healthcare | Commonwealth Bank vs. BTC Health Limited | Commonwealth Bank vs. Microequities Asset Management |
Sequoia Financial vs. Westpac Banking | Sequoia Financial vs. National Australia Bank | Sequoia Financial vs. National Australia Bank | Sequoia Financial vs. National Australia Bank |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |