Correlation Between Bank Central and QNB Corp
Can any of the company-specific risk be diversified away by investing in both Bank Central and QNB Corp 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 Central and QNB Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and QNB Corp, you can compare the effects of market volatilities on Bank Central and QNB Corp 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 Central with a short position of QNB Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and QNB Corp.
Diversification Opportunities for Bank Central and QNB Corp
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and QNB is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB Corp and Bank Central 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 Central Asia are associated (or correlated) with QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of Bank Central i.e., Bank Central and QNB Corp go up and down completely randomly.
Pair Corralation between Bank Central and QNB Corp
Assuming the 90 days horizon Bank Central is expected to generate 4.25 times less return on investment than QNB Corp. In addition to that, Bank Central is 1.14 times more volatile than QNB Corp. It trades about 0.03 of its total potential returns per unit of risk. QNB Corp is currently generating about 0.15 per unit of volatility. If you would invest 2,118 in QNB Corp on September 1, 2024 and sell it today you would earn a total of 1,182 from holding QNB Corp or generate 55.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.62% |
| Values | Daily Returns |
Bank Central Asia vs. QNB Corp
Performance |
| Timeline |
| Bank Central Asia |
| QNB Corp |
Bank Central and QNB Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and QNB Corp
The main advantage of trading using opposite Bank Central and QNB Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, QNB Corp 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 QNB Corp will offset losses from the drop in QNB Corp's long position.| Bank Central vs. Piraeus Bank SA | Bank Central vs. Turkiye Garanti Bankasi | Bank Central vs. Delhi Bank Corp | Bank Central vs. Uwharrie Capital Corp |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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