Correlation Between QBE Insurance and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on QBE Insurance and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Fevertree Drinks.
Diversification Opportunities for QBE Insurance and Fevertree Drinks
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between QBE and Fevertree is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of QBE Insurance i.e., QBE Insurance and Fevertree Drinks go up and down completely randomly.
Pair Corralation between QBE Insurance and Fevertree Drinks
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.64 times more return on investment than Fevertree Drinks. However, QBE Insurance Group is 1.56 times less risky than Fevertree Drinks. It trades about -0.01 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.11 per unit of risk. If you would invest 1,220 in QBE Insurance Group on October 30, 2024 and sell it today you would lose (10.00) from holding QBE Insurance Group or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. Fevertree Drinks PLC
Performance |
| Timeline |
| QBE Insurance Group |
| Fevertree Drinks PLC |
QBE Insurance and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Fevertree Drinks
The main advantage of trading using opposite QBE Insurance and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| QBE Insurance vs. STGEORGE MINING LTD | QBE Insurance vs. Monument Mining Limited | QBE Insurance vs. CLEAN ENERGY FUELS | QBE Insurance vs. Carnegie Clean Energy |
| Fevertree Drinks vs. ADRIATIC METALS LS 013355 | Fevertree Drinks vs. ALTAIR RES INC | Fevertree Drinks vs. AEON METALS LTD | Fevertree Drinks vs. SIERRA METALS |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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