Correlation Between Semiconductor Manufacturing and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Semiconductor Manufacturing 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 Semiconductor Manufacturing and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semiconductor Manufacturing International and QBE Insurance Group, you can compare the effects of market volatilities on Semiconductor Manufacturing 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 Semiconductor Manufacturing with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and QBE Insurance.
Diversification Opportunities for Semiconductor Manufacturing and QBE Insurance
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Semiconductor and QBE is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing In 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 Semiconductor Manufacturing 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 Semiconductor Manufacturing International 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 Semiconductor Manufacturing i.e., Semiconductor Manufacturing and QBE Insurance go up and down completely randomly.
Pair Corralation between Semiconductor Manufacturing and QBE Insurance
If you would invest 1,160 in QBE Insurance Group on November 1, 2024 and sell it today you would earn a total of 50.00 from holding QBE Insurance Group or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Semiconductor Manufacturing In vs. QBE Insurance Group
Performance |
| Timeline |
| Semiconductor Manufacturing |
| QBE Insurance Group |
Semiconductor Manufacturing and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semiconductor Manufacturing and QBE Insurance
The main advantage of trading using opposite Semiconductor Manufacturing and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Manufacturing 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.The idea behind Semiconductor Manufacturing International and QBE Insurance Group 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.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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