Correlation Between Bluescope Steel and Bank Of Queensland
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Bank Of Queensland 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 Bluescope Steel and Bank Of Queensland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Bank Of Queensland, you can compare the effects of market volatilities on Bluescope Steel and Bank Of Queensland 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 Bluescope Steel with a short position of Bank Of Queensland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Bank Of Queensland.
Diversification Opportunities for Bluescope Steel and Bank Of Queensland
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bluescope and Bank is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Bank Of Queensland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Of Queensland and Bluescope Steel 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 Bluescope Steel are associated (or correlated) with Bank Of Queensland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Of Queensland has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Bank Of Queensland go up and down completely randomly.
Pair Corralation between Bluescope Steel and Bank Of Queensland
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 2.54 times more return on investment than Bank Of Queensland. However, Bluescope Steel is 2.54 times more volatile than Bank Of Queensland. It trades about 0.11 of its potential returns per unit of risk. Bank Of Queensland is currently generating about 0.2 per unit of risk. If you would invest 2,119 in Bluescope Steel on August 29, 2024 and sell it today you would earn a total of 124.00 from holding Bluescope Steel or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Bank Of Queensland
Performance |
| Timeline |
| Bluescope Steel |
| Bank Of Queensland |
Bluescope Steel and Bank Of Queensland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Bank Of Queensland
The main advantage of trading using opposite Bluescope Steel and Bank Of Queensland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Bank Of Queensland 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 Bank Of Queensland will offset losses from the drop in Bank Of Queensland's long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Sandfire Resources NL | Bluescope Steel vs. Aneka Tambang Tbk |
| Bank Of Queensland vs. Argo Investments | Bank Of Queensland vs. A1 Investments Resources | Bank Of Queensland vs. Hutchison Telecommunications | Bank Of Queensland vs. Hotel Property Investments |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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