Correlation Between Star Diamond and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Star Diamond 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 Star Diamond and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Diamond and QBE Insurance Group, you can compare the effects of market volatilities on Star Diamond 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 Star Diamond with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Diamond and QBE Insurance.
Diversification Opportunities for Star Diamond and QBE Insurance
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Star and QBE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Star Diamond 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 Star Diamond 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 Star Diamond 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 Star Diamond i.e., Star Diamond and QBE Insurance go up and down completely randomly.
Pair Corralation between Star Diamond and QBE Insurance
Assuming the 90 days horizon Star Diamond is expected to generate 14.22 times more return on investment than QBE Insurance. However, Star Diamond is 14.22 times more volatile than QBE Insurance Group. It trades about 0.04 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.32 per unit of risk. If you would invest 1.65 in Star Diamond on August 28, 2024 and sell it today you would lose (0.60) from holding Star Diamond or give up 36.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Star Diamond vs. QBE Insurance Group
Performance |
| Timeline |
| Star Diamond |
| QBE Insurance Group |
Star Diamond and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Diamond and QBE Insurance
The main advantage of trading using opposite Star Diamond and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Diamond 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.| Star Diamond vs. Constellation Software | Star Diamond vs. Goodyear Tire Rubber | Star Diamond vs. UPDATE SOFTWARE | Star Diamond vs. Eagle Materials |
| QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. NMI Holdings | QBE Insurance vs. Origin Agritech | QBE Insurance vs. SIVERS SEMICONDUCTORS AB |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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