Correlation Between QBE Insurance and Sapiens International
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Sapiens International 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 Sapiens International 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 Sapiens International, you can compare the effects of market volatilities on QBE Insurance and Sapiens International 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 Sapiens International. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Sapiens International.
Diversification Opportunities for QBE Insurance and Sapiens International
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between QBE and Sapiens is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International 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 Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of QBE Insurance i.e., QBE Insurance and Sapiens International go up and down completely randomly.
Pair Corralation between QBE Insurance and Sapiens International
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.89 times more return on investment than Sapiens International. However, QBE Insurance Group is 1.12 times less risky than Sapiens International. It trades about 0.07 of its potential returns per unit of risk. Sapiens International is currently generating about 0.03 per unit of risk. If you would invest 909.00 in QBE Insurance Group on September 2, 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 | Very Weak |
| Accuracy | 83.47% |
| Values | Daily Returns |
QBE Insurance Group vs. Sapiens International
Performance |
| Timeline |
| QBE Insurance Group |
| Sapiens International |
QBE Insurance and Sapiens International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Sapiens International
The main advantage of trading using opposite QBE Insurance and Sapiens International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Sapiens International 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 Sapiens International will offset losses from the drop in Sapiens International's long position.The idea behind QBE Insurance Group and Sapiens International 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.| Sapiens International vs. PROS Holdings | Sapiens International vs. Meridianlink | Sapiens International vs. Enfusion | Sapiens International vs. PDF Solutions |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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