Correlation Between QBE Insurance and EBRO FOODS

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

Diversification Opportunities for QBE Insurance and EBRO FOODS

QBEEBRODiversified AwayQBEEBRODiversified Away100%
0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between QBE and EBRO is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and EBRO FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBRO FOODS 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 EBRO FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBRO FOODS has no effect on the direction of QBE Insurance i.e., QBE Insurance and EBRO FOODS go up and down completely randomly.

Pair Corralation between QBE Insurance and EBRO FOODS

Assuming the 90 days horizon QBE Insurance is expected to generate 1.84 times less return on investment than EBRO FOODS. In addition to that, QBE Insurance is 1.52 times more volatile than EBRO FOODS. It trades about 0.04 of its total potential returns per unit of risk. EBRO FOODS is currently generating about 0.11 per unit of volatility. If you would invest  1,572  in EBRO FOODS on November 18, 2024 and sell it today you would earn a total of  86.00  from holding EBRO FOODS or generate 5.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

QBE Insurance Group  vs.  EBRO FOODS

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15QBE AZU
       Timeline  
QBE Insurance Group 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, QBE Insurance is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.411.611.81212.212.4
EBRO FOODS 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in EBRO FOODS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EBRO FOODS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb15.615.81616.216.416.6

QBE Insurance and EBRO FOODS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.98-2.98-1.98-0.980.01.02.053.14.165.21 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15QBE AZU
       Returns  

Pair Trading with QBE Insurance and EBRO FOODS

The main advantage of trading using opposite QBE Insurance and EBRO FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, EBRO FOODS 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 EBRO FOODS will offset losses from the drop in EBRO FOODS's long position.
The idea behind QBE Insurance Group and EBRO FOODS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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