Correlation Between Aussie Broadband and Qbe Insurance
Can any of the company-specific risk be diversified away by investing in both Aussie Broadband 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 Aussie Broadband and Qbe Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aussie Broadband and Qbe Insurance Group, you can compare the effects of market volatilities on Aussie Broadband 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 Aussie Broadband with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aussie Broadband and Qbe Insurance.
Diversification Opportunities for Aussie Broadband and Qbe Insurance
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aussie and Qbe is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aussie Broadband 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 Aussie Broadband 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 Aussie Broadband 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 Aussie Broadband i.e., Aussie Broadband and Qbe Insurance go up and down completely randomly.
Pair Corralation between Aussie Broadband and Qbe Insurance
Assuming the 90 days trading horizon Aussie Broadband is expected to generate 1.03 times more return on investment than Qbe Insurance. However, Aussie Broadband is 1.03 times more volatile than Qbe Insurance Group. It trades about -0.18 of its potential returns per unit of risk. Qbe Insurance Group is currently generating about -0.25 per unit of risk. If you would invest 372.00 in Aussie Broadband on October 4, 2024 and sell it today you would lose (14.00) from holding Aussie Broadband or give up 3.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aussie Broadband vs. Qbe Insurance Group
Performance |
Timeline |
Aussie Broadband |
Qbe Insurance Group |
Aussie Broadband and Qbe Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aussie Broadband and Qbe Insurance
The main advantage of trading using opposite Aussie Broadband and Qbe Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aussie Broadband 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.Aussie Broadband vs. Duketon Mining | Aussie Broadband vs. Black Rock Mining | Aussie Broadband vs. Galena Mining | Aussie Broadband vs. Metro Mining |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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