Correlation Between Legend Holdings and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Legend Holdings and QBE Insurance 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 Legend Holdings and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legend Holdings and QBE Insurance Group, you can compare the effects of market volatilities on Legend Holdings and QBE Insurance 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 Legend Holdings with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Holdings and QBE Insurance.
Diversification Opportunities for Legend Holdings and QBE Insurance
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legend and QBE is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Legend Holdings and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group and Legend Holdings 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 Legend Holdings are associated (or correlated) with QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of Legend Holdings i.e., Legend Holdings and QBE Insurance go up and down completely randomly.
Pair Corralation between Legend Holdings and QBE Insurance
Assuming the 90 days horizon Legend Holdings is expected to generate 2.94 times more return on investment than QBE Insurance. However, Legend Holdings is 2.94 times more volatile than QBE Insurance Group. It trades about 0.14 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.26 per unit of risk. If you would invest 62.00 in Legend Holdings on September 3, 2024 and sell it today you would earn a total of 22.00 from holding Legend Holdings or generate 35.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Holdings vs. QBE Insurance Group
Performance |
| Timeline |
| Legend Holdings |
| QBE Insurance Group |
Legend Holdings and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Holdings and QBE Insurance
The main advantage of trading using opposite Legend Holdings and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Holdings position performs unexpectedly, QBE Insurance 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 QBE Insurance will offset losses from the drop in QBE Insurance's long position.| Legend Holdings vs. QBE Insurance Group | Legend Holdings vs. BANKINTER ADR 2007 | Legend Holdings vs. Citic Telecom International | Legend Holdings vs. Cogent Communications Holdings |
| QBE Insurance vs. INFORMATION SVC GRP | QBE Insurance vs. Fidelity National Information | QBE Insurance vs. PUBLIC STORAGE PRFO | QBE Insurance vs. DOCDATA |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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