Correlation Between Qbe Insurance and Macquarie Technology

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

Diversification Opportunities for Qbe Insurance and Macquarie Technology

0.72

Correlation Coefficient

Qbe Insurance  Macquarie Technology

Poor diversification

The 3 months correlation between Qbe and Macquarie is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Qbe Insurance Group and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology 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 Macquarie Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Technology has no effect on the direction of Qbe Insurance i.e., Qbe Insurance and Macquarie Technology go up and down completely randomly.

Pair Corralation between Qbe Insurance and Macquarie Technology

Assuming the 90 days trading horizon Qbe Insurance Group is expected to generate 1.02 times more return on investment than Macquarie Technology. However, Qbe Insurance is 1.02 times more volatile than Macquarie Technology Group. It trades about -0.01 of its potential returns per unit of risk. Macquarie Technology Group is currently generating about -0.12 per unit of risk. If you would invest  1,899  in Qbe Insurance Group on September 15, 2024 and sell it today you would lose (9.00) from holding Qbe Insurance Group or give up 0.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Qbe Insurance Group  vs.  Macquarie Technology Group

Qbe Insurance Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qbe Insurance Group are ranked lower than 11 (%) 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.

Macquarie Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Technology Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Macquarie Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Qbe Insurance and Macquarie Technology

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

The idea behind Qbe Insurance Group and Macquarie Technology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.