Correlation Between QBE Insurance and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Sterling Construction 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 Sterling Construction 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 Sterling Construction, you can compare the effects of market volatilities on QBE Insurance and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Sterling Construction.
Diversification Opportunities for QBE Insurance and Sterling Construction
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between QBE and Sterling is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of QBE Insurance i.e., QBE Insurance and Sterling Construction go up and down completely randomly.
Pair Corralation between QBE Insurance and Sterling Construction
Assuming the 90 days horizon QBE Insurance is expected to generate 11.05 times less return on investment than Sterling Construction. But when comparing it to its historical volatility, QBE Insurance Group is 1.24 times less risky than Sterling Construction. It trades about 0.01 of its potential returns per unit of risk. Sterling Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 10,785 in Sterling Construction on January 12, 2025 and sell it today you would earn a total of 790.00 from holding Sterling Construction or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. Sterling Construction
Performance |
| Timeline |
| QBE Insurance Group |
| Sterling Construction |
QBE Insurance and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Sterling Construction
The main advantage of trading using opposite QBE Insurance and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| QBE Insurance vs. Apollo Medical Holdings | QBE Insurance vs. Medical Properties Trust | QBE Insurance vs. Corsair Gaming | QBE Insurance vs. RYANAIR HLDGS ADR |
| Sterling Construction vs. SPORTING | Sterling Construction vs. TELECOM ITALIA | Sterling Construction vs. ANTA Sports Products | Sterling Construction vs. Ming Le Sports |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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