Correlation Between Commonwealth Bank and Regal Partners

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

Diversification Opportunities for Commonwealth Bank and Regal Partners

0.77

Correlation Coefficient

Commonwealth Bank  Regal Partners

Poor diversification

The 3 months correlation between Commonwealth and Regal is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Regal Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Partners 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 Regal Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Partners has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Regal Partners go up and down completely randomly.

Pair Corralation between Commonwealth Bank and Regal Partners

Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 22.62 times less return on investment than Regal Partners. But when comparing it to its historical volatility, Commonwealth Bank of is 15.24 times less risky than Regal Partners. It trades about 0.11 of its potential returns per unit of risk. Regal Partners is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  188.00  in Regal Partners on April 24, 2025 and sell it today you would earn a total of  81.00  from holding Regal Partners or generate 43.09% return on investment over 90 days.

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

Commonwealth Bank of  vs.  Regal Partners

Commonwealth Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Bank of are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Commonwealth Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Regal Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Partners are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Regal Partners unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commonwealth Bank and Regal Partners

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

The idea behind Commonwealth Bank of and Regal Partners 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.