Correlation Between QBE Insurance and Sandstorm Gold

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

Diversification Opportunities for QBE Insurance and Sandstorm Gold

-0.37

Correlation Coefficient

QBE Insurance  Sandstorm Gold

Very good diversification

The 3 months correlation between QBE and Sandstorm is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of QBE Insurance i.e., QBE Insurance and Sandstorm Gold go up and down completely randomly.

Pair Corralation between QBE Insurance and Sandstorm Gold

Assuming the 90 days horizon QBE Insurance Group is expected to generate 1.38 times more return on investment than Sandstorm Gold. However, QBE Insurance is 1.38 times more volatile than Sandstorm Gold Ltd. It trades about 0.04 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.01 per unit of risk. If you would invest  926.00  in QBE Insurance Group on September 27, 2024 and sell it today you would earn a total of  264.00  from holding QBE Insurance Group or generate 28.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.05%
Values	Daily Returns

QBE Insurance Group  vs.  Sandstorm Gold Ltd

QBE Insurance Group

Risk-Adjusted Performance

5 of 100

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 weak forward indicators, QBE Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sandstorm Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandstorm Gold Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with QBE Insurance and Sandstorm Gold

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

The idea behind QBE Insurance Group and Sandstorm Gold Ltd 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 CEOs Directory module to screen CEOs from public companies around the world.