Correlation Between Microsoft and QBE INSURGROUP
Can any of the company-specific risk be diversified away by investing in both Microsoft and QBE INSURGROUP 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 Microsoft and QBE INSURGROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and QBE INSURGROUP, you can compare the effects of market volatilities on Microsoft and QBE INSURGROUP 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 Microsoft with a short position of QBE INSURGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and QBE INSURGROUP.
Diversification Opportunities for Microsoft and QBE INSURGROUP
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and QBE is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and QBE INSURGROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE INSURGROUP and Microsoft 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 Microsoft are associated (or correlated) with QBE INSURGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE INSURGROUP has no effect on the direction of Microsoft i.e., Microsoft and QBE INSURGROUP go up and down completely randomly.
Pair Corralation between Microsoft and QBE INSURGROUP
Assuming the 90 days trading horizon Microsoft is expected to under-perform the QBE INSURGROUP. In addition to that, Microsoft is 1.29 times more volatile than QBE INSURGROUP. It trades about -0.16 of its total potential returns per unit of risk. QBE INSURGROUP is currently generating about 0.14 per unit of volatility. If you would invest 1,210 in QBE INSURGROUP on November 27, 2024 and sell it today you would earn a total of 50.00 from holding QBE INSURGROUP or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. QBE INSURGROUP
Performance |
| Timeline |
| Microsoft |
| QBE INSURGROUP |
Microsoft and QBE INSURGROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and QBE INSURGROUP
The main advantage of trading using opposite Microsoft and QBE INSURGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, QBE INSURGROUP 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 INSURGROUP will offset losses from the drop in QBE INSURGROUP's long position.| Microsoft vs. PLAYMATES TOYS | Microsoft vs. NORTHEAST UTILITIES | Microsoft vs. FRACTAL GAMING GROUP | Microsoft vs. GAMING FAC SA |
| QBE INSURGROUP vs. ANGANG STEEL H | QBE INSURGROUP vs. BANK OCHINA H | QBE INSURGROUP vs. Takark Jelzlogbank Nyrt | QBE INSURGROUP vs. Direct Line Insurance |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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