Correlation Between Commonwealth Bank and Sezzle Common

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

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

Diversification Opportunities for Commonwealth Bank and Sezzle Common

0.84

Correlation Coefficient

Commonwealth Bank  Sezzle Common

Very poor diversification

The 3 months correlation between Commonwealth and Sezzle is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Sezzle Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sezzle Common Stock 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 of are associated (or correlated) with Sezzle Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sezzle Common Stock has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Sezzle Common go up and down completely randomly.

Pair Corralation between Commonwealth Bank and Sezzle Common

Assuming the 90 days horizon Commonwealth Bank is expected to generate 21.49 times less return on investment than Sezzle Common. But when comparing it to its historical volatility, Commonwealth Bank of is 8.41 times less risky than Sezzle Common. It trades about 0.06 of its potential returns per unit of risk. Sezzle Common Stock is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  15,223  in Sezzle Common Stock on September 16, 2024 and sell it today you would earn a total of  15,678  from holding Sezzle Common Stock or generate 102.99% return on investment over 90 days.

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

Commonwealth Bank of  vs.  Sezzle Common Stock

Commonwealth Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Bank of are ranked lower than 4 (%) 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.

Sezzle Common Stock

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sezzle Common Stock are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Sezzle Common disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commonwealth Bank and Sezzle Common

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

The idea behind Commonwealth Bank of and Sezzle Common Stock 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..