Correlation Between QBE Insurance and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on QBE Insurance and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Iridium Communications.
Diversification Opportunities for QBE Insurance and Iridium Communications
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QBE and Iridium is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of QBE Insurance i.e., QBE Insurance and Iridium Communications go up and down completely randomly.
Pair Corralation between QBE Insurance and Iridium Communications
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.58 times more return on investment than Iridium Communications. However, QBE Insurance Group is 1.72 times less risky than Iridium Communications. It trades about 0.52 of its potential returns per unit of risk. Iridium Communications is currently generating about 0.07 per unit of risk. If you would invest 1,030 in QBE Insurance Group on September 1, 2024 and sell it today you would earn a total of 190.00 from holding QBE Insurance Group or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. Iridium Communications
Performance |
| Timeline |
| QBE Insurance Group |
| Iridium Communications |
QBE Insurance and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Iridium Communications
The main advantage of trading using opposite QBE Insurance and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| QBE Insurance vs. Sumitomo Rubber Industries | QBE Insurance vs. SANOK RUBBER ZY | QBE Insurance vs. Applied Materials | QBE Insurance vs. NEWELL RUBBERMAID |
| Iridium Communications vs. ATT Inc | Iridium Communications vs. Deutsche Telekom AG | Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. NMI Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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