Correlation Between Bank of Queensland and Gtn

Can any of the company-specific risk be diversified away by investing in both Bank of Queensland and Gtn 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 Gtn 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 Gtn, you can compare the effects of market volatilities on Bank of Queensland and Gtn 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 Gtn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland and Gtn.

Diversification Opportunities for Bank of Queensland and Gtn

-0.12

Correlation Coefficient

Bank of Queensland  Gtn

Good diversification

The 3 months correlation between Bank and Gtn is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Gtn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gtn 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 Gtn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gtn has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Gtn go up and down completely randomly.

Pair Corralation between Bank of Queensland and Gtn

Assuming the 90 days trading horizon Bank of Queensland is expected to generate 87.02 times less return on investment than Gtn. But when comparing it to its historical volatility, Bank of Queensland is 15.78 times less risky than Gtn. It trades about 0.04 of its potential returns per unit of risk. Gtn is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Gtn on September 28, 2024 and sell it today you would earn a total of  12.00  from holding Gtn or generate 26.09% 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.  Gtn

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.

Gtn

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gtn are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Gtn unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Queensland and Gtn

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

The idea behind Bank of Queensland and Gtn 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .