Correlation Between QBE Insurance and Evolution Gaming
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Evolution Gaming 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 Evolution Gaming 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 Evolution Gaming Group, you can compare the effects of market volatilities on QBE Insurance and Evolution Gaming 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 Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Evolution Gaming.
Diversification Opportunities for QBE Insurance and Evolution Gaming
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between QBE and Evolution is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming 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 Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of QBE Insurance i.e., QBE Insurance and Evolution Gaming go up and down completely randomly.
Pair Corralation between QBE Insurance and Evolution Gaming
Assuming the 90 days horizon QBE Insurance Group is expected to generate 1.08 times more return on investment than Evolution Gaming. However, QBE Insurance is 1.08 times more volatile than Evolution Gaming Group. It trades about 0.07 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.03 per unit of risk. If you would invest 909.00 in QBE Insurance Group on September 4, 2024 and sell it today you would earn a total of 256.00 from holding QBE Insurance Group or generate 28.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.21% |
| Values | Daily Returns |
QBE Insurance Group vs. Evolution Gaming Group
Performance |
| Timeline |
| QBE Insurance Group |
| Evolution Gaming |
QBE Insurance and Evolution Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Evolution Gaming
The main advantage of trading using opposite QBE Insurance and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Evolution Gaming 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 Evolution Gaming will offset losses from the drop in Evolution Gaming's long position.The idea behind QBE Insurance Group and Evolution Gaming Group 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.| Evolution Gaming vs. Galaxy Gaming | Evolution Gaming vs. Everi Holdings | Evolution Gaming vs. Intema Solutions | Evolution Gaming vs. 888 Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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