Correlation Between Bank of Queensland and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Evolution Mining 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 Evolution Mining 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 Evolution Mining, you can compare the effects of market volatilities on Bank of Queensland and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Evolution Mining.
Diversification Opportunities for Bank of Queensland and Evolution Mining
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Evolution is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Evolution Mining go up and down completely randomly.
Pair Corralation between Bank of Queensland and Evolution Mining
Assuming the 90 days trading horizon Bank of Queensland is expected to generate 10.47 times less return on investment than Evolution Mining. But when comparing it to its historical volatility, Bank of Queensland is 5.31 times less risky than Evolution Mining. It trades about 0.06 of its potential returns per unit of risk. Evolution Mining is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 301.00 in Evolution Mining on December 12, 2024 and sell it today you would earn a total of 315.00 from holding Evolution Mining or generate 104.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Queensland vs. Evolution Mining
Performance |
| Timeline |
| Bank of Queensland |
| Evolution Mining |
Bank of Queensland and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and Evolution Mining
The main advantage of trading using opposite Bank of Queensland and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining's long position.| Bank of Queensland vs. Asian Battery Metals | ||
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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