Correlation Between QBE Insurance and Northland Power
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Northland Power 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 Northland Power 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 Northland Power, you can compare the effects of market volatilities on QBE Insurance and Northland Power 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 Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Northland Power.
Diversification Opportunities for QBE Insurance and Northland Power
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between QBE and Northland is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power 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 Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of QBE Insurance i.e., QBE Insurance and Northland Power go up and down completely randomly.
Pair Corralation between QBE Insurance and Northland Power
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.55 times more return on investment than Northland Power. However, QBE Insurance Group is 1.81 times less risky than Northland Power. It trades about 0.07 of its potential returns per unit of risk. Northland Power is currently generating about -0.03 per unit of risk. If you would invest 757.00 in QBE Insurance Group on November 7, 2024 and sell it today you would earn a total of 493.00 from holding QBE Insurance Group or generate 65.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. Northland Power
Performance |
| Timeline |
| QBE Insurance Group |
| Northland Power |
QBE Insurance and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Northland Power
The main advantage of trading using opposite QBE Insurance and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Northland Power 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 Northland Power will offset losses from the drop in Northland Power's long position.| QBE Insurance vs. Cardinal Health | QBE Insurance vs. OPKO HEALTH | QBE Insurance vs. Kingdee International Software | QBE Insurance vs. MPH Health Care |
| Northland Power vs. MAGNUM MINING EXP | Northland Power vs. CeoTronics AG | Northland Power vs. EPSILON HEALTHCARE LTD | Northland Power vs. Calibre Mining Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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