Correlation Between QBE Insurance and NioCorp Developments
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and NioCorp Developments 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 NioCorp Developments 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 NioCorp Developments Ltd, you can compare the effects of market volatilities on QBE Insurance and NioCorp Developments 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 NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and NioCorp Developments.
Diversification Opportunities for QBE Insurance and NioCorp Developments
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between QBE and NioCorp is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments 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 NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of QBE Insurance i.e., QBE Insurance and NioCorp Developments go up and down completely randomly.
Pair Corralation between QBE Insurance and NioCorp Developments
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.38 times more return on investment than NioCorp Developments. However, QBE Insurance Group is 2.65 times less risky than NioCorp Developments. It trades about 0.22 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about -0.2 per unit of risk. If you would invest 1,115 in QBE Insurance Group on September 3, 2024 and sell it today you would earn a total of 50.00 from holding QBE Insurance Group or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. NioCorp Developments Ltd
Performance |
| Timeline |
| QBE Insurance Group |
| NioCorp Developments |
QBE Insurance and NioCorp Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and NioCorp Developments
The main advantage of trading using opposite QBE Insurance and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.| QBE Insurance vs. AmTrust Financial Services | QBE Insurance vs. AmTrust Financial Services | QBE Insurance vs. AmTrust Financial Services | QBE Insurance vs. AmTrust Financial Services |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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