Correlation Between Bank of Queensland and EROAD
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and EROAD 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 EROAD 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 EROAD, you can compare the effects of market volatilities on Bank of Queensland and EROAD 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 EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and EROAD.
Diversification Opportunities for Bank of Queensland and EROAD
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and EROAD is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD 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 EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and EROAD go up and down completely randomly.
Pair Corralation between Bank of Queensland and EROAD
Assuming the 90 days trading horizon Bank of Queensland is expected to under-perform the EROAD. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Queensland is 8.23 times less risky than EROAD. The stock trades about -0.08 of its potential returns per unit of risk. The EROAD is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 84.00 in EROAD on August 31, 2024 and sell it today you would earn a total of 3.00 from holding EROAD or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Queensland vs. EROAD
Performance |
| Timeline |
| Bank of Queensland |
| EROAD |
Bank of Queensland and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and EROAD
The main advantage of trading using opposite Bank of Queensland and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's 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 |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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