Correlation Between Bank of Queensland and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Champion Iron 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 Champion Iron 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 Champion Iron, you can compare the effects of market volatilities on Bank of Queensland and Champion Iron 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 Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Champion Iron.
Diversification Opportunities for Bank of Queensland and Champion Iron
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Champion is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron 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 Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Champion Iron go up and down completely randomly.
Pair Corralation between Bank of Queensland and Champion Iron
Assuming the 90 days trading horizon Bank of Queensland is expected to generate 0.11 times more return on investment than Champion Iron. However, Bank of Queensland is 9.39 times less risky than Champion Iron. It trades about -0.07 of its potential returns per unit of risk. Champion Iron is currently generating about -0.08 per unit of risk. If you would invest 10,365 in Bank of Queensland on September 3, 2024 and sell it today you would lose (38.00) from holding Bank of Queensland or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Queensland vs. Champion Iron
Performance |
| Timeline |
| Bank of Queensland |
| Champion Iron |
Bank of Queensland and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and Champion Iron
The main advantage of trading using opposite Bank of Queensland and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| Bank of Queensland vs. Champion Iron | Bank of Queensland vs. iShares Global Healthcare | Bank of Queensland vs. Ridley | Bank of Queensland vs. Peel Mining |
| Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Bluescope Steel | Champion Iron vs. Aneka Tambang Tbk |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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