Correlation Between Bank of Queensland and Collins Foods
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Collins Foods 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 Collins Foods 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 Collins Foods, you can compare the effects of market volatilities on Bank of Queensland and Collins Foods 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 Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Collins Foods.
Diversification Opportunities for Bank of Queensland and Collins Foods
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Collins is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Collins Foods go up and down completely randomly.
Pair Corralation between Bank of Queensland and Collins Foods
Assuming the 90 days trading horizon Bank of Queensland is expected to generate 1.51 times less return on investment than Collins Foods. But when comparing it to its historical volatility, Bank of Queensland is 5.25 times less risky than Collins Foods. It trades about 0.09 of its potential returns per unit of risk. Collins Foods is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 768.00 in Collins Foods on August 31, 2024 and sell it today you would earn a total of 91.00 from holding Collins Foods or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Bank of Queensland vs. Collins Foods
Performance |
| Timeline |
| Bank of Queensland |
| Collins Foods |
Bank of Queensland and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and Collins Foods
The main advantage of trading using opposite Bank of Queensland and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| Bank of Queensland vs. Fisher Paykel Healthcare | Bank of Queensland vs. Ramsay Health Care | Bank of Queensland vs. Global Health | Bank of Queensland vs. Austco Healthcare |
| Collins Foods vs. Aneka Tambang Tbk | Collins Foods vs. Unibail Rodamco Westfield SE | Collins Foods vs. Macquarie Group | Collins Foods vs. Commonwealth Bank |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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