Correlation Between Micron Technology and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Micron Technology 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 Micron Technology and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and QBE Insurance Group, you can compare the effects of market volatilities on Micron Technology 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 Micron Technology with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and QBE Insurance.
Diversification Opportunities for Micron Technology and QBE Insurance
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and QBE is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology 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 Micron Technology 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 Micron Technology 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 Micron Technology i.e., Micron Technology and QBE Insurance go up and down completely randomly.
Pair Corralation between Micron Technology and QBE Insurance
Assuming the 90 days trading horizon Micron Technology is expected to generate 2.77 times more return on investment than QBE Insurance. However, Micron Technology is 2.77 times more volatile than QBE Insurance Group. It trades about 0.24 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.22 per unit of risk. If you would invest 8,488 in Micron Technology on October 28, 2024 and sell it today you would earn a total of 1,333 from holding Micron Technology or generate 15.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. QBE Insurance Group
Performance |
| Timeline |
| Micron Technology |
| QBE Insurance Group |
Micron Technology and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and QBE Insurance
The main advantage of trading using opposite Micron Technology and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology 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.| Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc |
| QBE Insurance vs. PICC Property and | QBE Insurance vs. Fairfax Financial Holdings | QBE Insurance vs. Insurance Australia Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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