Correlation Between Strategic Education and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Strategic Education 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 Strategic Education and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Education and QBE Insurance Group, you can compare the effects of market volatilities on Strategic Education 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 Strategic Education with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and QBE Insurance.
Diversification Opportunities for Strategic Education and QBE Insurance
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Strategic and QBE is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education 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 Strategic Education 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 Strategic Education 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 Strategic Education i.e., Strategic Education and QBE Insurance go up and down completely randomly.
Pair Corralation between Strategic Education and QBE Insurance
Assuming the 90 days horizon Strategic Education is expected to generate 2.45 times more return on investment than QBE Insurance. However, Strategic Education is 2.45 times more volatile than QBE Insurance Group. It trades about 0.14 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.16 per unit of risk. If you would invest 8,547 in Strategic Education on February 22, 2024 and sell it today you would earn a total of 2,253 from holding Strategic Education or generate 26.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Strategic Education vs. QBE Insurance Group
Performance |
Timeline |
Strategic Education |
QBE Insurance Group |
Strategic Education and QBE Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Strategic Education and QBE Insurance
The main advantage of trading using opposite Strategic Education and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Education 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.Strategic Education vs. Laureate Education | Strategic Education vs. CITIUS RESOURCES LS 005 | Strategic Education vs. Superior Plus Corp | Strategic Education vs. Origin Agritech |
QBE Insurance vs. PennyMac Mortgage Investment | QBE Insurance vs. Gladstone Investment | QBE Insurance vs. SLR Investment Corp | QBE Insurance vs. REINET INVESTMENTS SCA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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