Correlation Between QBE Insurance and Enersys

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

Diversification Opportunities for QBE Insurance and Enersys

-0.73

Correlation Coefficient

QBE Insurance  Enersys

Pay attention - limited upside

The 3 months correlation between QBE and Enersys is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of QBE Insurance i.e., QBE Insurance and Enersys go up and down completely randomly.

Pair Corralation between QBE Insurance and Enersys

Assuming the 90 days horizon QBE Insurance Group is expected to generate 1.61 times more return on investment than Enersys. However, QBE Insurance is 1.61 times more volatile than Enersys. It trades about 0.07 of its potential returns per unit of risk. Enersys is currently generating about -0.07 per unit of risk. If you would invest  1,080  in QBE Insurance Group on September 27, 2024 and sell it today you would earn a total of  110.00  from holding QBE Insurance Group or generate 10.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

QBE Insurance Group  vs.  Enersys

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.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with QBE Insurance and Enersys

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

The idea behind QBE Insurance Group and Enersys 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.