Correlation Between Qbe Insurance and Woolworths
Can any of the company-specific risk be diversified away by investing in both Qbe Insurance and Woolworths 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 Qbe Insurance and Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qbe Insurance Group and Woolworths, you can compare the effects of market volatilities on Qbe Insurance and Woolworths 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 Qbe Insurance with a short position of Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qbe Insurance and Woolworths.
Diversification Opportunities for Qbe Insurance and Woolworths
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Qbe and Woolworths is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Qbe Insurance Group and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths and Qbe Insurance 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 Qbe Insurance Group are associated (or correlated) with Woolworths. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths has no effect on the direction of Qbe Insurance i.e., Qbe Insurance and Woolworths go up and down completely randomly.
Pair Corralation between Qbe Insurance and Woolworths
Assuming the 90 days trading horizon Qbe Insurance Group is expected to generate 1.3 times more return on investment than Woolworths. However, Qbe Insurance is 1.3 times more volatile than Woolworths. It trades about 0.05 of its potential returns per unit of risk. Woolworths is currently generating about -0.03 per unit of risk. If you would invest 1,423 in Qbe Insurance Group on October 16, 2024 and sell it today you would earn a total of 486.00 from holding Qbe Insurance Group or generate 34.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qbe Insurance Group vs. Woolworths
Performance |
| Timeline |
| Qbe Insurance Group |
| Woolworths |
Qbe Insurance and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qbe Insurance and Woolworths
The main advantage of trading using opposite Qbe Insurance and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qbe Insurance position performs unexpectedly, Woolworths 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 Woolworths will offset losses from the drop in Woolworths' long position.| Qbe Insurance vs. Southern Cross Media | Qbe Insurance vs. Stelar Metals | Qbe Insurance vs. Autosports Group | Qbe Insurance vs. FireFly Metals |
| Woolworths vs. Neurotech International | Woolworths vs. The Environmental Group | Woolworths vs. Mach7 Technologies | Woolworths vs. Vulcan Steel |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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