Correlation Between QBE Insurance and Nemetschek

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

Diversification Opportunities for QBE Insurance and Nemetschek

0.69

Correlation Coefficient

QBE Insurance  Nemetschek

Poor diversification

The 3 months correlation between QBE and Nemetschek is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Nemetschek AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nemetschek AG ON 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 Nemetschek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nemetschek AG ON has no effect on the direction of QBE Insurance i.e., QBE Insurance and Nemetschek go up and down completely randomly.

Pair Corralation between QBE Insurance and Nemetschek

Assuming the 90 days horizon QBE Insurance is expected to generate 2.31 times less return on investment than Nemetschek. But when comparing it to its historical volatility, QBE Insurance Group is 1.82 times less risky than Nemetschek. It trades about 0.07 of its potential returns per unit of risk. Nemetschek AG ON is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,250  in Nemetschek AG ON on December 4, 2024 and sell it today you would earn a total of  1,180  from holding Nemetschek AG ON or generate 11.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

QBE Insurance Group  vs.  Nemetschek AG ON

QBE Insurance Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 5 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nemetschek AG ON

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nemetschek AG ON are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Nemetschek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QBE Insurance and Nemetschek

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

The idea behind QBE Insurance Group and Nemetschek AG ON 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .