Correlation Between QBE Insurance and Aquestive Therapeutics
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Aquestive Therapeutics 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 Aquestive Therapeutics 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 Aquestive Therapeutics, you can compare the effects of market volatilities on QBE Insurance and Aquestive Therapeutics 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 Aquestive Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Aquestive Therapeutics.
Diversification Opportunities for QBE Insurance and Aquestive Therapeutics
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between QBE and Aquestive is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics 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 Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of QBE Insurance i.e., QBE Insurance and Aquestive Therapeutics go up and down completely randomly.
Pair Corralation between QBE Insurance and Aquestive Therapeutics
Assuming the 90 days horizon QBE Insurance is expected to generate 3.48 times less return on investment than Aquestive Therapeutics. But when comparing it to its historical volatility, QBE Insurance Group is 1.62 times less risky than Aquestive Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 90.00 in Aquestive Therapeutics on September 24, 2024 and sell it today you would earn a total of 269.00 from holding Aquestive Therapeutics or generate 298.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 75.1% |
Values | Daily Returns |
QBE Insurance Group vs. Aquestive Therapeutics
Performance |
Timeline |
QBE Insurance Group |
Aquestive Therapeutics |
QBE Insurance and Aquestive Therapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with QBE Insurance and Aquestive Therapeutics
The main advantage of trading using opposite QBE Insurance and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Aquestive Therapeutics 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 Aquestive Therapeutics will offset losses from the drop in Aquestive Therapeutics' long position.The idea behind QBE Insurance Group and Aquestive Therapeutics 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.Aquestive Therapeutics vs. Evoke Pharma | Aquestive Therapeutics vs. Dynavax Technologies | Aquestive Therapeutics vs. Amphastar P | Aquestive Therapeutics vs. Lantheus Holdings |
Check out your portfolio center.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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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