Correlation Between QBE Insurance and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and ELECTRONIC ARTS 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 ELECTRONIC ARTS 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 ELECTRONIC ARTS, you can compare the effects of market volatilities on QBE Insurance and ELECTRONIC ARTS 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 ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and ELECTRONIC ARTS.
Diversification Opportunities for QBE Insurance and ELECTRONIC ARTS
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between QBE and ELECTRONIC is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS 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 ELECTRONIC ARTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTRONIC ARTS has no effect on the direction of QBE Insurance i.e., QBE Insurance and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between QBE Insurance and ELECTRONIC ARTS
Assuming the 90 days horizon QBE Insurance is expected to generate 1.04 times less return on investment than ELECTRONIC ARTS. In addition to that, QBE Insurance is 1.13 times more volatile than ELECTRONIC ARTS. It trades about 0.47 of its total potential returns per unit of risk. ELECTRONIC ARTS is currently generating about 0.55 per unit of volatility. If you would invest 13,280 in ELECTRONIC ARTS on August 30, 2024 and sell it today you would earn a total of 2,400 from holding ELECTRONIC ARTS or generate 18.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. ELECTRONIC ARTS
Performance |
| Timeline |
| QBE Insurance Group |
| ELECTRONIC ARTS |
QBE Insurance and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and ELECTRONIC ARTS
The main advantage of trading using opposite QBE Insurance and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, ELECTRONIC ARTS 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 ELECTRONIC ARTS will offset losses from the drop in ELECTRONIC ARTS's long position.| QBE Insurance vs. Darden Restaurants | QBE Insurance vs. AIR PRODCHEMICALS | QBE Insurance vs. Japan Tobacco | QBE Insurance vs. Strategic Education |
| ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Superior Plus Corp | ELECTRONIC ARTS vs. SIVERS SEMICONDUCTORS AB |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |