Correlation Between Leeuwin Metals and Bank of Queensland
Can any of the company-specific risk be diversified away by investing in both Leeuwin 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 Leeuwin 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 Leeuwin Metals and Bank of Queensland, you can compare the effects of market volatilities on Leeuwin 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 Leeuwin Metals with a short position of Bank of Queensland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leeuwin Metals and Bank of Queensland.
Diversification Opportunities for Leeuwin Metals and Bank of Queensland
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Leeuwin and Bank is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Leeuwin 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 Leeuwin 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 Leeuwin 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 Leeuwin Metals i.e., Leeuwin Metals and Bank of Queensland go up and down completely randomly.
Pair Corralation between Leeuwin Metals and Bank of Queensland
Assuming the 90 days trading horizon Leeuwin Metals is expected to generate 7.14 times more return on investment than Bank of Queensland. However, Leeuwin Metals is 7.14 times more volatile than Bank of Queensland. It trades about 0.05 of its potential returns per unit of risk. Bank of Queensland is currently generating about 0.05 per unit of risk. If you would invest 6.30 in Leeuwin Metals on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Leeuwin Metals or generate 15.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Leeuwin Metals vs. Bank of Queensland
Performance |
| Timeline |
| Leeuwin Metals |
| Bank of Queensland |
Leeuwin Metals and Bank of Queensland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leeuwin Metals and Bank of Queensland
The main advantage of trading using opposite Leeuwin Metals and Bank of Queensland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leeuwin 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.| Leeuwin Metals vs. Northern Star Resources | Leeuwin Metals vs. Evolution Mining | Leeuwin Metals vs. De Grey Mining |
| 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 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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