Correlation Between Credit Clear and Bank of Queensland
Can any of the company-specific risk be diversified away by investing in both Credit Clear 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 Credit Clear 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 Credit Clear and Bank of Queensland, you can compare the effects of market volatilities on Credit Clear 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 Credit Clear with a short position of Bank of Queensland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Clear and Bank of Queensland.
Diversification Opportunities for Credit Clear and Bank of Queensland
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Credit and Bank is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Credit Clear 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 Credit Clear 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 Credit Clear 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 Credit Clear i.e., Credit Clear and Bank of Queensland go up and down completely randomly.
Pair Corralation between Credit Clear and Bank of Queensland
Assuming the 90 days trading horizon Credit Clear is expected to generate 10.87 times more return on investment than Bank of Queensland. However, Credit Clear is 10.87 times more volatile than Bank of Queensland. It trades about 0.02 of its potential returns per unit of risk. Bank of Queensland is currently generating about 0.07 per unit of risk. If you would invest 39.00 in Credit Clear on August 29, 2024 and sell it today you would lose (3.00) from holding Credit Clear or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Clear vs. Bank of Queensland
Performance |
| Timeline |
| Credit Clear |
| Bank of Queensland |
Credit Clear and Bank of Queensland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Clear and Bank of Queensland
The main advantage of trading using opposite Credit Clear and Bank of Queensland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Clear 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.| Credit Clear vs. PVW Resources | Credit Clear vs. Woolworths | Credit Clear vs. Wesfarmers | Credit Clear vs. Coles Group |
| Bank of Queensland vs. Champion Iron | Bank of Queensland vs. Ridley | Bank of Queensland vs. Peel Mining | Bank of Queensland vs. Australian Dairy Farms |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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