Correlation Between Aristocrat Leisure and Qbe Insurance
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure 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 Aristocrat Leisure and Qbe Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Qbe Insurance Group, you can compare the effects of market volatilities on Aristocrat Leisure 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 Aristocrat Leisure with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Qbe Insurance.
Diversification Opportunities for Aristocrat Leisure and Qbe Insurance
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aristocrat and Qbe is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure i.e., Aristocrat Leisure and Qbe Insurance go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Qbe Insurance
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 1.06 times more return on investment than Qbe Insurance. However, Aristocrat Leisure is 1.06 times more volatile than Qbe Insurance Group. It trades about 0.11 of its potential returns per unit of risk. Qbe Insurance Group is currently generating about 0.09 per unit of risk. If you would invest 3,526 in Aristocrat Leisure on September 1, 2024 and sell it today you would earn a total of 3,249 from holding Aristocrat Leisure or generate 92.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure vs. Qbe Insurance Group
Performance |
| Timeline |
| Aristocrat Leisure |
| Qbe Insurance Group |
Aristocrat Leisure and Qbe Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Qbe Insurance
The main advantage of trading using opposite Aristocrat Leisure and Qbe Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure 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.| Aristocrat Leisure vs. iShares Global Healthcare | Aristocrat Leisure vs. Australian Dairy Farms | Aristocrat Leisure vs. Adriatic Metals Plc | Aristocrat Leisure vs. Australian Agricultural |
| Qbe Insurance vs. Diversified United Investment | Qbe Insurance vs. Bank of Queensland | Qbe Insurance vs. Home Consortium | Qbe Insurance vs. Carlton Investments |
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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