Correlation Between Commonwealth Bank and Jupiter Mines

Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Jupiter Mines 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 Jupiter Mines 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 Jupiter Mines, you can compare the effects of market volatilities on Commonwealth Bank and Jupiter Mines 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 Jupiter Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Jupiter Mines.

Diversification Opportunities for Commonwealth Bank and Jupiter Mines

0.75

Correlation Coefficient

Commonwealth Bank  Jupiter Mines

Poor diversification

The 3 months correlation between Commonwealth and Jupiter is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Jupiter Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Mines 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 Jupiter Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Mines has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Jupiter Mines go up and down completely randomly.

Pair Corralation between Commonwealth Bank and Jupiter Mines

Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 11.9 times less return on investment than Jupiter Mines. But when comparing it to its historical volatility, Commonwealth Bank of is 5.51 times less risky than Jupiter Mines. It trades about 0.07 of its potential returns per unit of risk. Jupiter Mines is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Jupiter Mines on April 24, 2025 and sell it today you would earn a total of  9.00  from holding Jupiter Mines or generate 64.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Commonwealth Bank of  vs.  Jupiter Mines

Commonwealth Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Bank of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Commonwealth Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Jupiter Mines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter Mines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Jupiter Mines unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commonwealth Bank and Jupiter Mines

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

The idea behind Commonwealth Bank of and Jupiter Mines 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.