Correlation Between QBE Insurance and DexCom
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and DexCom 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 DexCom 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 DexCom Inc, you can compare the effects of market volatilities on QBE Insurance and DexCom 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 DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and DexCom.
Diversification Opportunities for QBE Insurance and DexCom
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between QBE and DexCom is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom 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 DexCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DexCom Inc has no effect on the direction of QBE Insurance i.e., QBE Insurance and DexCom go up and down completely randomly.
Pair Corralation between QBE Insurance and DexCom
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.53 times more return on investment than DexCom. However, QBE Insurance Group is 1.88 times less risky than DexCom. It trades about 0.07 of its potential returns per unit of risk. DexCom Inc is currently generating about -0.01 per unit of risk. If you would invest 740.00 in QBE Insurance Group on September 4, 2024 and sell it today you would earn a total of 480.00 from holding QBE Insurance Group or generate 64.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
QBE Insurance Group vs. DexCom Inc
Performance |
| Timeline |
| QBE Insurance Group |
| DexCom Inc |
QBE Insurance and DexCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and DexCom
The main advantage of trading using opposite QBE Insurance and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, DexCom 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 DexCom will offset losses from the drop in DexCom's long position.| QBE Insurance vs. Hitachi Construction Machinery | QBE Insurance vs. INDOFOOD AGRI RES | QBE Insurance vs. Lery Seafood Group | QBE Insurance vs. HF FOODS GRP |
| DexCom vs. Thermo Fisher Scientific | DexCom vs. Danaher | DexCom vs. Danaher | DexCom vs. SIEMENS HEALTH ADR050 |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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