Correlation Between QBE Insurance and Akanda Corp
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Akanda Corp 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 Akanda Corp 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 Akanda Corp, you can compare the effects of market volatilities on QBE Insurance and Akanda Corp 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 Akanda Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Akanda Corp.
Diversification Opportunities for QBE Insurance and Akanda Corp
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between QBE and Akanda is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Akanda Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akanda 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 Akanda Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akanda Corp has no effect on the direction of QBE Insurance i.e., QBE Insurance and Akanda Corp go up and down completely randomly.
Pair Corralation between QBE Insurance and Akanda Corp
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.32 times more return on investment than Akanda Corp. However, QBE Insurance Group is 3.1 times less risky than Akanda Corp. It trades about 0.04 of its potential returns per unit of risk. Akanda Corp is currently generating about -0.07 per unit of risk. If you would invest 970.00 in QBE Insurance Group on August 31, 2024 and sell it today you would earn a total of 195.00 from holding QBE Insurance Group or generate 20.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 68.78% |
| Values | Daily Returns |
QBE Insurance Group vs. Akanda Corp
Performance |
| Timeline |
| QBE Insurance Group |
| Akanda Corp |
QBE Insurance and Akanda Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Akanda Corp
The main advantage of trading using opposite QBE Insurance and Akanda Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Akanda Corp 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 Akanda Corp will offset losses from the drop in Akanda Corp's long position.The idea behind QBE Insurance Group and Akanda Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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