Correlation Between Bank of Queensland and Credit Clear
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Credit Clear 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 Credit Clear 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 Credit Clear, you can compare the effects of market volatilities on Bank of Queensland and Credit Clear 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 Credit Clear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Credit Clear.
Diversification Opportunities for Bank of Queensland and Credit Clear
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Credit is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Credit Clear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Clear 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 Credit Clear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Clear has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Credit Clear go up and down completely randomly.
Pair Corralation between Bank of Queensland and Credit Clear
Assuming the 90 days trading horizon Bank of Queensland is expected to generate 2.38 times less return on investment than Credit Clear. But when comparing it to its historical volatility, Bank of Queensland is 10.87 times less risky than Credit Clear. It trades about 0.07 of its potential returns per unit of risk. Credit Clear is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 39.00 in Credit Clear on August 29, 2024 and sell it today you would lose (3.00) from holding Credit Clear or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Queensland vs. Credit Clear
Performance |
| Timeline |
| Bank of Queensland |
| Credit Clear |
Bank of Queensland and Credit Clear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and Credit Clear
The main advantage of trading using opposite Bank of Queensland and Credit Clear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Credit Clear 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 Credit Clear will offset losses from the drop in Credit Clear's long position.| Bank of Queensland vs. Champion Iron | Bank of Queensland vs. Ridley | Bank of Queensland vs. Peel Mining | Bank of Queensland vs. Australian Dairy Farms |
| Credit Clear vs. PVW Resources | Credit Clear vs. Woolworths | Credit Clear vs. Wesfarmers | Credit Clear vs. Coles Group |
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 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..
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