Correlation Between Bank of Queensland and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Stelar Metals 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 Stelar Metals 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 Stelar Metals, you can compare the effects of market volatilities on Bank of Queensland and Stelar Metals 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 Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Stelar Metals.
Diversification Opportunities for Bank of Queensland and Stelar Metals
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Stelar is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals 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 Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Stelar Metals go up and down completely randomly.
Pair Corralation between Bank of Queensland and Stelar Metals
Assuming the 90 days trading horizon Bank of Queensland is expected to generate 0.08 times more return on investment than Stelar Metals. However, Bank of Queensland is 12.32 times less risky than Stelar Metals. It trades about -0.03 of its potential returns per unit of risk. Stelar Metals is currently generating about -0.08 per unit of risk. If you would invest 10,541 in Bank of Queensland on August 25, 2024 and sell it today you would lose (21.00) from holding Bank of Queensland or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Queensland vs. Stelar Metals
Performance |
| Timeline |
| Bank of Queensland |
| Stelar Metals |
Bank of Queensland and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and Stelar Metals
The main advantage of trading using opposite Bank of Queensland and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Stelar Metals 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 Stelar Metals will offset losses from the drop in Stelar Metals' long position.| Bank of Queensland vs. Mystate | Bank of Queensland vs. Insurance Australia Group | Bank of Queensland vs. Origin Energy | Bank of Queensland vs. Ecofibre |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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