Correlation Between Micron Technology and QBE Insurance

Can any of the company-specific risk be diversified away by investing in both Micron Technology 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 Micron Technology and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micron Technology and QBE Insurance Group, you can compare the effects of market volatilities on Micron Technology 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 Micron Technology with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and QBE Insurance.

Diversification Opportunities for Micron Technology and QBE Insurance

0.1

Correlation Coefficient

Micron Technology  QBE Insurance

Average diversification

The 3 months correlation between Micron and QBE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology 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 Micron Technology 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 Micron Technology 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 Micron Technology i.e., Micron Technology and QBE Insurance go up and down completely randomly.

Pair Corralation between Micron Technology and QBE Insurance

Assuming the 90 days trading horizon Micron Technology is expected to under-perform the QBE Insurance. In addition to that, Micron Technology is 3.25 times more volatile than QBE Insurance Group. It trades about -0.12 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about -0.13 per unit of volatility. If you would invest  1,200  in QBE Insurance Group on September 22, 2024 and sell it today you would lose (50.00) from holding QBE Insurance Group or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  QBE Insurance Group

Micron Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

QBE Insurance Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QBE Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Micron Technology and QBE Insurance

The main advantage of trading using opposite Micron Technology and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology 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.

The idea behind Micron Technology and QBE Insurance Group 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.