Correlation Between Bank of Queensland and Gold Road
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Bank of Queensland and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Gold Road.
Diversification Opportunities for Bank of Queensland and Gold Road
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Gold is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Gold Road go up and down completely randomly.
Pair Corralation between Bank of Queensland and Gold Road
Assuming the 90 days trading horizon Bank of Queensland is expected to generate 33.13 times less return on investment than Gold Road. But when comparing it to its historical volatility, Bank of Queensland is 7.84 times less risky than Gold Road. It trades about 0.13 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 211.00 in Gold Road Resources on November 7, 2024 and sell it today you would earn a total of 45.00 from holding Gold Road Resources or generate 21.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bank of Queensland vs. Gold Road Resources
Performance |
| Timeline |
| Bank of Queensland |
| Gold Road Resources |
Bank of Queensland and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and Gold Road
The main advantage of trading using opposite Bank of Queensland and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Bank of Queensland vs. Genetic Technologies | Bank of Queensland vs. Thorney Technologies | Bank of Queensland vs. Technology One | Bank of Queensland vs. ARN Media Limited |
| Gold Road vs. Lendlease Group | Gold Road vs. Falcon Metals | Gold Road vs. Champion Iron | Gold Road vs. Insurance Australia 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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