Correlation Between QBE Insurance and Magnis Resources

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

Diversification Opportunities for QBE Insurance and Magnis Resources

0.0

Correlation Coefficient

QBE Insurance  Magnis Resources

Pay attention - limited upside

The 3 months correlation between QBE and Magnis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Magnis Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnis Resources 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 Magnis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnis Resources has no effect on the direction of QBE Insurance i.e., QBE Insurance and Magnis Resources go up and down completely randomly.

Pair Corralation between QBE Insurance and Magnis Resources

If you would invest  1,150  in QBE Insurance Group on October 25, 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	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

QBE Insurance Group  vs.  Magnis Resources Limited

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 unsteady basic indicators, QBE Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Magnis Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magnis Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Magnis Resources is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with QBE Insurance and Magnis Resources

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

The idea behind QBE Insurance Group and Magnis Resources Limited 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.