Correlation Between Bank of Queensland and Pioneer Credit

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

Diversification Opportunities for Bank of Queensland and Pioneer Credit

0.46

Correlation Coefficient

Bank of Queensland  Pioneer Credit

Very weak diversification

The 3 months correlation between Bank and Pioneer is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Pioneer Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Credit 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 Pioneer Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Credit has no effect on the direction of Bank of Queensland i.e., Bank of Queensland and Pioneer Credit go up and down completely randomly.

Pair Corralation between Bank of Queensland and Pioneer Credit

Assuming the 90 days trading horizon Bank of Queensland is expected to generate 0.15 times more return on investment than Pioneer Credit. However, Bank of Queensland is 6.5 times less risky than Pioneer Credit. It trades about 0.01 of its potential returns per unit of risk. Pioneer Credit is currently generating about -0.39 per unit of risk. If you would invest  10,396  in Bank of Queensland on September 26, 2024 and sell it today you would earn a total of  4.00  from holding Bank of Queensland or generate 0.04% return on investment over 90 days.

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

Bank of Queensland  vs.  Pioneer Credit

Bank of Queensland

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Queensland are ranked lower than 4 (%) 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.

Pioneer Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pioneer Credit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Pioneer Credit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank of Queensland and Pioneer Credit

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

The idea behind Bank of Queensland and Pioneer Credit 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.