Correlation Between Retail Food and Qbe Insurance
Can any of the company-specific risk be diversified away by investing in both Retail Food and Qbe Insurance 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 Retail Food and Qbe Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Qbe Insurance Group, you can compare the effects of market volatilities on Retail Food and Qbe Insurance 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 Retail Food with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Qbe Insurance.
Diversification Opportunities for Retail Food and Qbe Insurance
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Retail and Qbe is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Qbe Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qbe Insurance Group and Retail Food 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 Retail Food Group are associated (or correlated) with Qbe Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qbe Insurance Group has no effect on the direction of Retail Food i.e., Retail Food and Qbe Insurance go up and down completely randomly.
Pair Corralation between Retail Food and Qbe Insurance
Assuming the 90 days trading horizon Retail Food is expected to generate 1.05 times less return on investment than Qbe Insurance. In addition to that, Retail Food is 1.76 times more volatile than Qbe Insurance Group. It trades about 0.18 of its total potential returns per unit of risk. Qbe Insurance Group is currently generating about 0.33 per unit of volatility. If you would invest 1,721 in Qbe Insurance Group on August 29, 2024 and sell it today you would earn a total of 213.00 from holding Qbe Insurance Group or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Retail Food Group vs. Qbe Insurance Group
Performance |
| Timeline |
| Retail Food Group |
| Qbe Insurance Group |
Retail Food and Qbe Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Qbe Insurance
The main advantage of trading using opposite Retail Food and Qbe Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Qbe Insurance 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 Qbe Insurance will offset losses from the drop in Qbe Insurance's long position.| Retail Food vs. Autosports Group | Retail Food vs. AiMedia Technologies | Retail Food vs. BKI Investment | Retail Food vs. ARN Media Limited |
| Qbe Insurance vs. Red Hill Iron | Qbe Insurance vs. Platinum Asset Management | Qbe Insurance vs. Carlton Investments | Qbe Insurance vs. Hotel Property Investments |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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