Correlation Between Bank of Queensland and Vicinity Centres
Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Vicinity Centres 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 Vicinity Centres 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 Vicinity Centres Re, you can compare the effects of market volatilities on Bank of Queensland and Vicinity Centres 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 Vicinity Centres. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Vicinity Centres.
Diversification Opportunities for Bank of Queensland and Vicinity Centres
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Vicinity is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Vicinity Centres Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres 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 Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Vicinity Centres go up and down completely randomly.
Pair Corralation between Bank of Queensland and Vicinity Centres
Assuming the 90 days trading horizon Bank of Queensland is expected to under-perform the Vicinity Centres. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Queensland is 4.22 times less risky than Vicinity Centres. The stock trades about -0.07 of its potential returns per unit of risk. The Vicinity Centres Re is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Vicinity Centres Re on August 31, 2024 and sell it today you would earn a total of 2.00 from holding Vicinity Centres Re or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of Queensland vs. Vicinity Centres Re
Performance |
| Timeline |
| Bank of Queensland |
| Vicinity Centres |
Bank of Queensland and Vicinity Centres Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Queensland and Vicinity Centres
The main advantage of trading using opposite Bank of Queensland and Vicinity Centres positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Vicinity Centres 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 Vicinity Centres will offset losses from the drop in Vicinity Centres' long position.| Bank of Queensland vs. Fisher Paykel Healthcare | Bank of Queensland vs. Ramsay Health Care | Bank of Queensland vs. Global Health | Bank of Queensland vs. Austco Healthcare |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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