Correlation Between QBE Insurance and VITEC SOFTWARE

Can any of the company-specific risk be diversified away by investing in both QBE Insurance and VITEC SOFTWARE 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 VITEC SOFTWARE 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 VITEC SOFTWARE GROUP, you can compare the effects of market volatilities on QBE Insurance and VITEC SOFTWARE 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 VITEC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and VITEC SOFTWARE.

Diversification Opportunities for QBE Insurance and VITEC SOFTWARE

0.41

Correlation Coefficient

QBE Insurance  VITEC SOFTWARE

Very weak diversification

The 3 months correlation between QBE and VITEC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and VITEC SOFTWARE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITEC SOFTWARE GROUP 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 VITEC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITEC SOFTWARE GROUP has no effect on the direction of QBE Insurance i.e., QBE Insurance and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between QBE Insurance and VITEC SOFTWARE

Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.39 times more return on investment than VITEC SOFTWARE. However, QBE Insurance Group is 2.59 times less risky than VITEC SOFTWARE. It trades about 0.18 of its potential returns per unit of risk. VITEC SOFTWARE GROUP is currently generating about 0.06 per unit of risk. If you would invest  1,180  in QBE Insurance Group on November 4, 2024 and sell it today you would earn a total of  50.00  from holding QBE Insurance Group or generate 4.24% return on investment over 90 days.

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

QBE Insurance Group  vs.  VITEC SOFTWARE GROUP

QBE Insurance Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QBE Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VITEC SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QBE Insurance and VITEC SOFTWARE

The main advantage of trading using opposite QBE Insurance and VITEC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, VITEC SOFTWARE 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 VITEC SOFTWARE will offset losses from the drop in VITEC SOFTWARE's long position.

The idea behind QBE Insurance Group and VITEC SOFTWARE 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.