Correlation Between Stora Enso and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Stora Enso 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 Stora Enso and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stora Enso Oyj and QBE Insurance Group, you can compare the effects of market volatilities on Stora Enso 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 Stora Enso with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stora Enso and QBE Insurance.
Diversification Opportunities for Stora Enso and QBE Insurance
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stora and QBE is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Stora Enso Oyj 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 Stora Enso 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 Stora Enso Oyj 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 Stora Enso i.e., Stora Enso and QBE Insurance go up and down completely randomly.
Pair Corralation between Stora Enso and QBE Insurance
Assuming the 90 days trading horizon Stora Enso Oyj is expected to generate 1.32 times more return on investment than QBE Insurance. However, Stora Enso is 1.32 times more volatile than QBE Insurance Group. It trades about 0.27 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.17 per unit of risk. If you would invest 934.00 in Stora Enso Oyj on October 24, 2024 and sell it today you would earn a total of 71.00 from holding Stora Enso Oyj or generate 7.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Stora Enso Oyj vs. QBE Insurance Group
Performance |
| Timeline |
| Stora Enso Oyj |
| QBE Insurance Group |
Stora Enso and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stora Enso and QBE Insurance
The main advantage of trading using opposite Stora Enso and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stora Enso 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.| Stora Enso vs. QBE Insurance Group | Stora Enso vs. VIENNA INSURANCE GR | Stora Enso vs. Japan Post Insurance | Stora Enso vs. UNIQA INSURANCE GR |
| QBE Insurance vs. Tokyu Construction Co | QBE Insurance vs. DAIRY FARM INTL | QBE Insurance vs. Titan Machinery | QBE Insurance vs. CarsalesCom |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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