Correlation Between Bank of Queensland and Legacy Iron
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Legacy 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 Legacy 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 Legacy Iron Ore, you can compare the effects of market volatilities on Bank of Queensland and Legacy 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 Legacy Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Legacy Iron.
Diversification Opportunities for Bank of Queensland and Legacy Iron
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Legacy is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Legacy Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Iron Ore 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 Legacy Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Iron Ore has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Legacy Iron go up and down completely randomly.
Pair Corralation between Bank of Queensland and Legacy Iron
Assuming the 90 days trading horizon Bank of Queensland is expected to generate 1.06 times less return on investment than Legacy Iron. But when comparing it to its historical volatility, Bank of Queensland is 11.85 times less risky than Legacy Iron. It trades about 0.19 of its potential returns per unit of risk. Legacy Iron Ore is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 0.90 in Legacy Iron Ore on October 20, 2024 and sell it today you would earn a total of 0.00 from holding Legacy Iron Ore or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Bank of Queensland vs. Legacy Iron Ore
Performance |
| Timeline |
| Bank of Queensland |
| Legacy Iron Ore |
Bank of Queensland and Legacy Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and Legacy Iron
The main advantage of trading using opposite Bank of Queensland and Legacy Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Legacy 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 Legacy Iron will offset losses from the drop in Legacy Iron's long position.| Bank of Queensland vs. Black Rock Mining | Bank of Queensland vs. Kkr Credit Income | Bank of Queensland vs. Stelar Metals | Bank of Queensland vs. Medibank Private |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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