Correlation Between QBE Insurance and AVITA Medical
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and AVITA Medical 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 AVITA Medical 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 AVITA Medical, you can compare the effects of market volatilities on QBE Insurance and AVITA Medical 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 AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and AVITA Medical.
Diversification Opportunities for QBE Insurance and AVITA Medical
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between QBE and AVITA is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical 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 AVITA Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVITA Medical has no effect on the direction of QBE Insurance i.e., QBE Insurance and AVITA Medical go up and down completely randomly.
Pair Corralation between QBE Insurance and AVITA Medical
Assuming the 90 days horizon QBE Insurance is expected to generate 2.35 times less return on investment than AVITA Medical. But when comparing it to its historical volatility, QBE Insurance Group is 2.81 times less risky than AVITA Medical. It trades about 0.06 of its potential returns per unit of risk. AVITA Medical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 123.00 in AVITA Medical on September 20, 2024 and sell it today you would earn a total of 107.00 from holding AVITA Medical or generate 86.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
QBE Insurance Group vs. AVITA Medical
Performance |
| Timeline |
| QBE Insurance Group |
| AVITA Medical |
QBE Insurance and AVITA Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and AVITA Medical
The main advantage of trading using opposite QBE Insurance and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, AVITA Medical 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 AVITA Medical will offset losses from the drop in AVITA Medical's long position.| QBE Insurance vs. INTERCONT HOTELS | QBE Insurance vs. Highlight Communications AG | QBE Insurance vs. Spirent Communications plc | QBE Insurance vs. MELIA HOTELS |
| AVITA Medical vs. MHP Hotel AG | AVITA Medical vs. Hyatt Hotels | AVITA Medical vs. DISTRICT METALS | AVITA Medical vs. Jacquet Metal Service |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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