Correlation Between QBE Insurance and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Dairy Farm 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 Dairy Farm 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 Dairy Farm International, you can compare the effects of market volatilities on QBE Insurance and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Dairy Farm.
Diversification Opportunities for QBE Insurance and Dairy Farm
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between QBE and Dairy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of QBE Insurance i.e., QBE Insurance and Dairy Farm go up and down completely randomly.
Pair Corralation between QBE Insurance and Dairy Farm
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.61 times more return on investment than Dairy Farm. However, QBE Insurance Group is 1.63 times less risky than Dairy Farm. It trades about 0.06 of its potential returns per unit of risk. Dairy Farm International is currently generating about -0.01 per unit of risk. If you would invest 762.00 in QBE Insurance Group on October 13, 2024 and sell it today you would earn a total of 408.00 from holding QBE Insurance Group or generate 53.54% 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. Dairy Farm International
Performance |
| Timeline |
| QBE Insurance Group |
| Dairy Farm International |
QBE Insurance and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Dairy Farm
The main advantage of trading using opposite QBE Insurance and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| QBE Insurance vs. Fukuyama Transporting Co | QBE Insurance vs. Cal Maine Foods | QBE Insurance vs. NTG Nordic Transport | QBE Insurance vs. SOEDER SPORTFISKE AB |
| Dairy Farm vs. Gladstone Investment | Dairy Farm vs. JLF INVESTMENT | Dairy Farm vs. WILLIS LEASE FIN | Dairy Farm vs. China BlueChemical |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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