Correlation Between QBE Insurance and Primo Water
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Primo Water 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 Primo Water 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 Primo Water Corp, you can compare the effects of market volatilities on QBE Insurance and Primo Water 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 Primo Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Primo Water.
Diversification Opportunities for QBE Insurance and Primo Water
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between QBE and Primo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Primo Water Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Water Corp 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 Primo Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Water Corp has no effect on the direction of QBE Insurance i.e., QBE Insurance and Primo Water go up and down completely randomly.
Pair Corralation between QBE Insurance and Primo Water
Assuming the 90 days horizon QBE Insurance is expected to generate 1.1 times less return on investment than Primo Water. But when comparing it to its historical volatility, QBE Insurance Group is 1.21 times less risky than Primo Water. It trades about 0.08 of its potential returns per unit of risk. Primo Water Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,299 in Primo Water Corp on September 3, 2024 and sell it today you would earn a total of 921.00 from holding Primo Water Corp or generate 70.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.9% |
| Values | Daily Returns |
QBE Insurance Group vs. Primo Water Corp
Performance |
| Timeline |
| QBE Insurance Group |
| Primo Water Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
QBE Insurance and Primo Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Primo Water
The main advantage of trading using opposite QBE Insurance and Primo Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Primo Water 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 Primo Water will offset losses from the drop in Primo Water's long position.| QBE Insurance vs. INFORMATION SVC GRP | QBE Insurance vs. Fidelity National Information | QBE Insurance vs. PUBLIC STORAGE PRFO | QBE Insurance vs. DOCDATA |
| Primo Water vs. ALGOMA STEEL GROUP | Primo Water vs. PKSHA TECHNOLOGY INC | Primo Water vs. Reliance Steel Aluminum | Primo Water vs. ORMAT TECHNOLOGIES |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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