Correlation Between QBE Insurance and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY, you can compare the effects of market volatilities on QBE Insurance and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and SCOTT TECHNOLOGY.
Diversification Opportunities for QBE Insurance and SCOTT TECHNOLOGY
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QBE and SCOTT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of QBE Insurance i.e., QBE Insurance and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between QBE Insurance and SCOTT TECHNOLOGY
Assuming the 90 days horizon QBE Insurance is expected to generate 2.4 times less return on investment than SCOTT TECHNOLOGY. But when comparing it to its historical volatility, QBE Insurance Group is 2.55 times less risky than SCOTT TECHNOLOGY. It trades about 0.14 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 112.00 in SCOTT TECHNOLOGY on September 13, 2024 and sell it today you would earn a total of 9.00 from holding SCOTT TECHNOLOGY or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| QBE Insurance Group |
| SCOTT TECHNOLOGY |
QBE Insurance and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and SCOTT TECHNOLOGY
The main advantage of trading using opposite QBE Insurance and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| QBE Insurance vs. Insurance Australia Group | QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. SIVERS SEMICONDUCTORS AB | QBE Insurance vs. CHINA HUARONG ENERHD 50 |
| SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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