Correlation Between Japan Post and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Japan Post 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 Japan Post and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Insurance and QBE Insurance Group, you can compare the effects of market volatilities on Japan Post 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 Japan Post with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and QBE Insurance.
Diversification Opportunities for Japan Post and QBE Insurance
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Japan and QBE is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance 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 Japan Post 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 Japan Post Insurance 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 Japan Post i.e., Japan Post and QBE Insurance go up and down completely randomly.
Pair Corralation between Japan Post and QBE Insurance
Assuming the 90 days trading horizon Japan Post is expected to generate 1.23 times less return on investment than QBE Insurance. In addition to that, Japan Post is 1.38 times more volatile than QBE Insurance Group. It trades about 0.04 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about 0.07 per unit of volatility. If you would invest 1,053 in QBE Insurance Group on August 28, 2024 and sell it today you would earn a total of 167.00 from holding QBE Insurance Group or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Post Insurance vs. QBE Insurance Group
Performance |
| Timeline |
| Japan Post Insurance |
| QBE Insurance Group |
Japan Post and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and QBE Insurance
The main advantage of trading using opposite Japan Post and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post 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.| Japan Post vs. CONAGRA FOODS | Japan Post vs. Dairy Farm International | Japan Post vs. Mitsui Chemicals | Japan Post vs. CHEMICAL INDUSTRIES |
| QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. NMI Holdings | QBE Insurance vs. Origin Agritech | QBE Insurance vs. SIVERS SEMICONDUCTORS AB |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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