Correlation Between SUNCORP PREF and BANK QLD

Can any of the company-specific risk be diversified away by investing in both SUNCORP PREF and BANK QLD 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 SUNCORP PREF and BANK QLD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SUNCORP PREF CPS3 and BANK QLD PREF, you can compare the effects of market volatilities on SUNCORP PREF and BANK QLD 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 SUNCORP PREF with a short position of BANK QLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUNCORP PREF and BANK QLD.

Diversification Opportunities for SUNCORP PREF and BANK QLD

0.0

Correlation Coefficient

SUNCORP PREF  BANK QLD

Pay attention - limited upside

The 3 months correlation between SUNCORP and BANK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SUNCORP PREF CPS3 and BANK QLD PREF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK QLD PREF and SUNCORP PREF 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 SUNCORP PREF CPS3 are associated (or correlated) with BANK QLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK QLD PREF has no effect on the direction of SUNCORP PREF i.e., SUNCORP PREF and BANK QLD go up and down completely randomly.

Pair Corralation between SUNCORP PREF and BANK QLD

If you would invest (100.00) in BANK QLD PREF on October 25, 2024 and sell it today you would earn a total of  100.00  from holding BANK QLD PREF or generate -100.0% return on investment over 90 days.

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

SUNCORP PREF CPS3  vs.  BANK QLD PREF

SUNCORP PREF CPS3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUNCORP PREF CPS3 has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, SUNCORP PREF is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BANK QLD PREF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK QLD PREF has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, BANK QLD is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SUNCORP PREF and BANK QLD

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

The idea behind SUNCORP PREF CPS3 and BANK QLD PREF 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.