Correlation Between Macquarie Technology and Qbe Insurance

Can any of the company-specific risk be diversified away by investing in both Macquarie Technology and Qbe Insurance 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 Macquarie Technology and Qbe Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Macquarie Technology Group and Qbe Insurance Group, you can compare the effects of market volatilities on Macquarie Technology and Qbe Insurance 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 Macquarie Technology with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Technology and Qbe Insurance.

Diversification Opportunities for Macquarie Technology and Qbe Insurance

0.66

Correlation Coefficient

Macquarie Technology  Qbe Insurance

Poor diversification

The 3 months correlation between Macquarie and Qbe is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Technology Group and Qbe Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qbe Insurance Group and Macquarie Technology 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 Macquarie Technology Group are associated (or correlated) with Qbe Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qbe Insurance Group has no effect on the direction of Macquarie Technology i.e., Macquarie Technology and Qbe Insurance go up and down completely randomly.

Pair Corralation between Macquarie Technology and Qbe Insurance

Assuming the 90 days trading horizon Macquarie Technology Group is expected to generate 1.16 times more return on investment than Qbe Insurance. However, Macquarie Technology is 1.16 times more volatile than Qbe Insurance Group. It trades about -0.01 of its potential returns per unit of risk. Qbe Insurance Group is currently generating about -0.08 per unit of risk. If you would invest  8,643  in Macquarie Technology Group on September 25, 2024 and sell it today you would lose (43.00) from holding Macquarie Technology Group or give up 0.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Macquarie Technology Group  vs.  Qbe Insurance Group

Macquarie Technology

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Technology Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Macquarie Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Qbe Insurance Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qbe Insurance Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Qbe Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macquarie Technology and Qbe Insurance

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

The idea behind Macquarie Technology Group and Qbe Insurance Group 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.

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.