Correlation Between Premier Investments and Bank of Queensland
Can any of the company-specific risk be diversified away by investing in both Premier Investments 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 Premier Investments 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 Premier Investments and Bank of Queensland, you can compare the effects of market volatilities on Premier Investments 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 Premier Investments with a short position of Bank of Queensland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Investments and Bank of Queensland.
Diversification Opportunities for Premier Investments and Bank of Queensland
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Premier and Bank is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Premier Investments 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 Premier Investments 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 Premier Investments 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 Premier Investments i.e., Premier Investments and Bank of Queensland go up and down completely randomly.
Pair Corralation between Premier Investments and Bank of Queensland
Assuming the 90 days trading horizon Premier Investments is expected to generate 4.14 times more return on investment than Bank of Queensland. However, Premier Investments is 4.14 times more volatile than Bank of Queensland. It trades about 0.09 of its potential returns per unit of risk. Bank of Queensland is currently generating about 0.06 per unit of risk. If you would invest 2,290 in Premier Investments on September 12, 2024 and sell it today you would earn a total of 1,211 from holding Premier Investments or generate 52.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Investments vs. Bank of Queensland
Performance |
| Timeline |
| Premier Investments |
| Bank of Queensland |
Premier Investments and Bank of Queensland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Investments and Bank of Queensland
The main advantage of trading using opposite Premier Investments and Bank of Queensland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Investments 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.| Premier Investments vs. Aneka Tambang Tbk | Premier Investments vs. BHP Group Limited | Premier Investments vs. Commonwealth Bank | Premier Investments vs. Commonwealth Bank of |
| Bank of Queensland vs. Premier Investments | Bank of Queensland vs. Aspire Mining | Bank of Queensland vs. Galena Mining | 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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