Correlation Between United Insurance and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both United Insurance 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 United Insurance and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and QBE Insurance Group, you can compare the effects of market volatilities on United Insurance 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 United Insurance with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and QBE Insurance.
Diversification Opportunities for United Insurance and QBE Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and QBE is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings 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 United 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 United Insurance Holdings 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 United Insurance i.e., United Insurance and QBE Insurance go up and down completely randomly.
Pair Corralation between United Insurance and QBE Insurance
Assuming the 90 days horizon United Insurance Holdings is expected to generate 3.67 times more return on investment than QBE Insurance. However, United Insurance is 3.67 times more volatile than QBE Insurance Group. It trades about 0.22 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.33 per unit of risk. If you would invest 965.00 in United Insurance Holdings on August 25, 2024 and sell it today you would earn a total of 265.00 from holding United Insurance Holdings or generate 27.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. QBE Insurance Group
Performance |
| Timeline |
| United Insurance Holdings |
| QBE Insurance Group |
United Insurance and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and QBE Insurance
The main advantage of trading using opposite United Insurance and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance 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.| United Insurance vs. QBE Insurance Group | United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. NMI Holdings |
| QBE Insurance vs. Insurance Australia Group | QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. NMI Holdings | QBE Insurance vs. Origin Agritech |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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