Correlation Between QBE Insurance and Computershare
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Computershare 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 Computershare 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 Computershare Ltd ADR, you can compare the effects of market volatilities on QBE Insurance and Computershare 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 Computershare. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Computershare.
Diversification Opportunities for QBE Insurance and Computershare
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between QBE and Computershare is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Computershare Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare ADR 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 Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare ADR has no effect on the direction of QBE Insurance i.e., QBE Insurance and Computershare go up and down completely randomly.
Pair Corralation between QBE Insurance and Computershare
Assuming the 90 days horizon QBE Insurance is expected to generate 1.68 times less return on investment than Computershare. In addition to that, QBE Insurance is 1.02 times more volatile than Computershare Ltd ADR. It trades about 0.03 of its total potential returns per unit of risk. Computershare Ltd ADR is currently generating about 0.06 per unit of volatility. If you would invest 2,087 in Computershare Ltd ADR on October 26, 2024 and sell it today you would earn a total of 72.00 from holding Computershare Ltd ADR or generate 3.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
QBE Insurance Group vs. Computershare Ltd ADR
Performance |
Timeline |
QBE Insurance Group |
Computershare ADR |
QBE Insurance and Computershare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with QBE Insurance and Computershare
The main advantage of trading using opposite QBE Insurance and Computershare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Computershare 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 Computershare will offset losses from the drop in Computershare's long position.QBE Insurance vs. Heritage Insurance Hldgs | QBE Insurance vs. Universal Insurance Holdings | QBE Insurance vs. Kingstone Companies | QBE Insurance vs. HCI Group |
Computershare vs. GiveMePower Corp | Computershare vs. Axis Technologies Group | Computershare vs. Vortex Brands Co | Computershare vs. Sysorex |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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