Correlation Between QBE Insurance and Hugo Boss

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

Diversification Opportunities for QBE Insurance and Hugo Boss

-0.42

Correlation Coefficient

QBE Insurance  Hugo Boss

Very good diversification

The 3 months correlation between QBE and Hugo is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Hugo Boss AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugo Boss AG 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 Hugo Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugo Boss AG has no effect on the direction of QBE Insurance i.e., QBE Insurance and Hugo Boss go up and down completely randomly.

Pair Corralation between QBE Insurance and Hugo Boss

Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.71 times more return on investment than Hugo Boss. However, QBE Insurance Group is 1.4 times less risky than Hugo Boss. It trades about 0.23 of its potential returns per unit of risk. Hugo Boss AG is currently generating about -0.28 per unit of risk. If you would invest  1,150  in QBE Insurance Group on October 23, 2024 and sell it today you would earn a total of  50.00  from holding QBE Insurance Group or generate 4.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

QBE Insurance Group  vs.  Hugo Boss AG

QBE Insurance Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 13 (%) 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.

Hugo Boss AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hugo Boss AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hugo Boss is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with QBE Insurance and Hugo Boss

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

The idea behind QBE Insurance Group and Hugo Boss AG 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.