Correlation Between Red Hill and Qbe Insurance
Can any of the company-specific risk be diversified away by investing in both Red Hill 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 Red Hill and Qbe Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Hill Iron and Qbe Insurance Group, you can compare the effects of market volatilities on Red Hill 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 Red Hill with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and Qbe Insurance.
Diversification Opportunities for Red Hill and Qbe Insurance
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Qbe is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron 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 Red Hill 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 Red Hill Iron 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 Red Hill i.e., Red Hill and Qbe Insurance go up and down completely randomly.
Pair Corralation between Red Hill and Qbe Insurance
Assuming the 90 days trading horizon Red Hill is expected to generate 1.01 times less return on investment than Qbe Insurance. In addition to that, Red Hill is 1.77 times more volatile than Qbe Insurance Group. It trades about 0.15 of its total potential returns per unit of risk. Qbe Insurance Group is currently generating about 0.26 per unit of volatility. If you would invest 1,654 in Qbe Insurance Group on August 29, 2024 and sell it today you would earn a total of 280.00 from holding Qbe Insurance Group or generate 16.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Hill Iron vs. Qbe Insurance Group
Performance |
| Timeline |
| Red Hill Iron |
| Qbe Insurance Group |
Red Hill and Qbe Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and Qbe Insurance
The main advantage of trading using opposite Red Hill and Qbe Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill 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.| Red Hill vs. Northern Star Resources | Red Hill vs. Evolution Mining | Red Hill vs. Bluescope Steel | Red Hill vs. Sandfire Resources NL |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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