Correlation Between Falcon Metals and Bank of Queensland
Can any of the company-specific risk be diversified away by investing in both Falcon Metals 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 Falcon Metals 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 Falcon Metals and Bank of Queensland, you can compare the effects of market volatilities on Falcon Metals 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 Falcon Metals with a short position of Bank of Queensland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Bank of Queensland.
Diversification Opportunities for Falcon Metals and Bank of Queensland
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Falcon and Bank is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals 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 Falcon Metals 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 Falcon Metals 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 Falcon Metals i.e., Falcon Metals and Bank of Queensland go up and down completely randomly.
Pair Corralation between Falcon Metals and Bank of Queensland
Assuming the 90 days trading horizon Falcon Metals is expected to generate 21.55 times more return on investment than Bank of Queensland. However, Falcon Metals is 21.55 times more volatile than Bank of Queensland. It trades about 0.01 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 28.00 in Falcon Metals on November 9, 2024 and sell it today you would lose (14.00) from holding Falcon Metals or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Falcon Metals vs. Bank of Queensland
Performance |
| Timeline |
| Falcon Metals |
| Bank of Queensland |
Falcon Metals and Bank of Queensland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Bank of Queensland
The main advantage of trading using opposite Falcon Metals and Bank of Queensland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals 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.| Falcon Metals vs. Healthco Healthcare and | Falcon Metals vs. Metro Mining | Falcon Metals vs. Perseus Mining | Falcon Metals vs. MetalsGrove Mining |
| Bank of Queensland vs. Insurance Australia Group | Bank of Queensland vs. Beston Global Food | Bank of Queensland vs. Clime Investment Management | Bank of Queensland vs. Arc Funds |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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