Correlation Between QBE Insurance and ADT
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and ADT 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 ADT 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 ADT Inc, you can compare the effects of market volatilities on QBE Insurance and ADT 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 ADT. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and ADT.
Diversification Opportunities for QBE Insurance and ADT
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QBE and ADT is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and ADT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADT Inc 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 ADT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADT Inc has no effect on the direction of QBE Insurance i.e., QBE Insurance and ADT go up and down completely randomly.
Pair Corralation between QBE Insurance and ADT
Assuming the 90 days horizon QBE Insurance is expected to generate 1.74 times less return on investment than ADT. In addition to that, QBE Insurance is 1.13 times more volatile than ADT Inc. It trades about 0.19 of its total potential returns per unit of risk. ADT Inc is currently generating about 0.36 per unit of volatility. If you would invest 675.00 in ADT Inc on November 1, 2024 and sell it today you would earn a total of 55.00 from holding ADT Inc or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
QBE Insurance Group vs. ADT Inc
Performance |
| Timeline |
| QBE Insurance Group |
| ADT Inc |
QBE Insurance and ADT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and ADT
The main advantage of trading using opposite QBE Insurance and ADT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, ADT 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 ADT will offset losses from the drop in ADT's long position.| QBE Insurance vs. PLAYSTUDIOS A DL 0001 | QBE Insurance vs. TOREX SEMICONDUCTOR LTD | QBE Insurance vs. RYU Apparel | QBE Insurance vs. Semiconductor Manufacturing International |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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