Correlation Between Bank of Queensland and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Qantas Airways 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 Qantas Airways 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 Qantas Airways, you can compare the effects of market volatilities on Bank of Queensland and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Qantas Airways.
Diversification Opportunities for Bank of Queensland and Qantas Airways
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Qantas is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Qantas Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Qantas Airways go up and down completely randomly.
Pair Corralation between Bank of Queensland and Qantas Airways
Assuming the 90 days trading horizon Bank of Queensland is expected to generate 33.22 times less return on investment than Qantas Airways. But when comparing it to its historical volatility, Bank of Queensland is 5.2 times less risky than Qantas Airways. It trades about 0.02 of its potential returns per unit of risk. Qantas Airways is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 907.00 in Qantas Airways on October 29, 2024 and sell it today you would earn a total of 39.00 from holding Qantas Airways or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Queensland vs. Qantas Airways
Performance |
| Timeline |
| Bank of Queensland |
| Qantas Airways |
Bank of Queensland and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and Qantas Airways
The main advantage of trading using opposite Bank of Queensland and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.| Bank of Queensland vs. Diversified United Investment | Bank of Queensland vs. Falcon Metals | Bank of Queensland vs. Hudson Investment Group | Bank of Queensland vs. Dalaroo Metals |
| Qantas Airways vs. Aristocrat Leisure | Qantas Airways vs. 4Dmedical | Qantas Airways vs. ABACUS STORAGE KING | Qantas Airways vs. Sports Entertainment 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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