Correlation Between COMMONWBK AUSTRSPADRS and Industrial

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

By analyzing existing cross correlation between COMMONWBK AUSTRSPADRS and Industrial and Commercial, you can compare the effects of market volatilities on COMMONWBK AUSTRSPADRS and Industrial 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 COMMONWBK AUSTRSPADRS with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMMONWBK AUSTRSPADRS and Industrial.

Diversification Opportunities for COMMONWBK AUSTRSPADRS and Industrial

0.57

Correlation Coefficient

COMMONWBK AUSTRSPADRS  Industrial

Very weak diversification

The 3 months correlation between COMMONWBK and Industrial is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding COMMONWBK AUSTRSPADRS and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of COMMONWBK AUSTRSPADRS i.e., COMMONWBK AUSTRSPADRS and Industrial go up and down completely randomly.

Pair Corralation between COMMONWBK AUSTRSPADRS and Industrial

Assuming the 90 days trading horizon COMMONWBK AUSTRSPADRS is expected to generate 1.73 times less return on investment than Industrial. But when comparing it to its historical volatility, COMMONWBK AUSTRSPADRS is 1.87 times less risky than Industrial. It trades about 0.11 of its potential returns per unit of risk. Industrial and Commercial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Industrial and Commercial on April 23, 2025 and sell it today you would earn a total of  8.00  from holding Industrial and Commercial or generate 13.79% return on investment over 90 days.

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

COMMONWBK AUSTRSPADRS  vs.  Industrial and Commercial

COMMONWBK AUSTRSPADRS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COMMONWBK AUSTRSPADRS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COMMONWBK AUSTRSPADRS may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Industrial and Commercial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Industrial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COMMONWBK AUSTRSPADRS and Industrial

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

The idea behind COMMONWBK AUSTRSPADRS and Industrial and Commercial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.