Correlation Between Bank Of Queensland and National Australia
Can any of the company-specific risk be diversified away by investing in both Bank Of Queensland and National Australia 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 Bank Of Queensland and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Of Queensland and National Australia Bank, you can compare the effects of market volatilities on Bank Of Queensland and National Australia 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 Bank Of Queensland with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of Queensland and National Australia.
Diversification Opportunities for Bank Of Queensland and National Australia
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and National is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of Queensland and National Australia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Australia Bank and Bank Of Queensland 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 Bank Of Queensland are associated (or correlated) with National Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Australia Bank has no effect on the direction of Bank Of Queensland i.e., Bank Of Queensland and National Australia go up and down completely randomly.
Pair Corralation between Bank Of Queensland and National Australia
Assuming the 90 days trading horizon Bank Of Queensland is expected to generate 1.27 times more return on investment than National Australia. However, Bank Of Queensland is 1.27 times more volatile than National Australia Bank. It trades about 0.13 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.08 per unit of risk. If you would invest 612.00 in Bank Of Queensland on August 29, 2024 and sell it today you would earn a total of 72.00 from holding Bank Of Queensland or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Of Queensland vs. National Australia Bank
Performance |
| Timeline |
| Bank Of Queensland |
| National Australia Bank |
Bank Of Queensland and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Of Queensland and National Australia
The main advantage of trading using opposite Bank Of Queensland and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of Queensland position performs unexpectedly, National Australia 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 National Australia will offset losses from the drop in National Australia's long position.| Bank Of Queensland vs. Argo Investments | Bank Of Queensland vs. A1 Investments Resources | Bank Of Queensland vs. Hutchison Telecommunications | Bank Of Queensland vs. Hotel Property Investments |
| National Australia vs. EP Financial Group | National Australia vs. Janison Education Group | National Australia vs. Charter Hall Retail | National Australia vs. Credit Clear |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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