Correlation Between Bank of Queensland and Cooper Metals

Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Cooper Metals 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 of Queensland and Cooper Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of Queensland and Cooper Metals, you can compare the effects of market volatilities on Bank of Queensland and Cooper Metals 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 of Queensland with a short position of Cooper Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Cooper Metals.

Diversification Opportunities for Bank of Queensland and Cooper Metals

-0.34

Correlation Coefficient

Bank of Queensland  Cooper Metals

Very good diversification

The 3 months correlation between Bank and Cooper is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Cooper Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Metals and Bank of Queensland 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 of Queensland are associated (or correlated) with Cooper Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Metals has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Cooper Metals go up and down completely randomly.

Pair Corralation between Bank of Queensland and Cooper Metals

Assuming the 90 days trading horizon Bank of Queensland is expected to generate 0.07 times more return on investment than Cooper Metals. However, Bank of Queensland is 14.31 times less risky than Cooper Metals. It trades about 0.05 of its potential returns per unit of risk. Cooper Metals is currently generating about -0.05 per unit of risk. If you would invest  10,305  in Bank of Queensland on September 30, 2024 and sell it today you would earn a total of  95.00  from holding Bank of Queensland or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bank of Queensland  vs.  Cooper Metals

Bank of Queensland

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Queensland are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bank of Queensland is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Cooper Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cooper Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bank of Queensland and Cooper Metals

The main advantage of trading using opposite Bank of Queensland and Cooper Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland position performs unexpectedly, Cooper Metals 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 Cooper Metals will offset losses from the drop in Cooper Metals' long position.

The idea behind Bank of Queensland and Cooper Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.