Correlation Between Anglo American and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Anglo American 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 Anglo American and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American plc and QBE Insurance Group, you can compare the effects of market volatilities on Anglo American 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 Anglo American with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and QBE Insurance.
Diversification Opportunities for Anglo American and QBE Insurance
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Anglo and QBE is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American plc 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 Anglo American 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 Anglo American plc 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 Anglo American i.e., Anglo American and QBE Insurance go up and down completely randomly.
Pair Corralation between Anglo American and QBE Insurance
Assuming the 90 days trading horizon Anglo American plc is expected to generate 1.0 times more return on investment than QBE Insurance. However, Anglo American is 1.0 times more volatile than QBE Insurance Group. It trades about 0.45 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.23 per unit of risk. If you would invest 2,783 in Anglo American plc on October 23, 2024 and sell it today you would earn a total of 268.00 from holding Anglo American plc or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Anglo American plc vs. QBE Insurance Group
Performance |
| Timeline |
| Anglo American plc |
| QBE Insurance Group |
Anglo American and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and QBE Insurance
The main advantage of trading using opposite Anglo American and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American 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.| Anglo American vs. BHP Group Limited | Anglo American vs. BHP Group Limited | Anglo American vs. Rio Tinto Group | Anglo American vs. Rio Tinto Group |
| QBE Insurance vs. Casio Computer CoLtd | QBE Insurance vs. MACOM Technology Solutions | QBE Insurance vs. US Physical Therapy | QBE Insurance vs. Planet Fitness |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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