Correlation Between Air Transport and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and QBE Insurance Group, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and QBE Insurance.
Diversification Opportunities for Air Transport and QBE Insurance
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Air and QBE is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services 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 Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and QBE Insurance go up and down completely randomly.
Pair Corralation between Air Transport and QBE Insurance
Assuming the 90 days horizon Air Transport Services is expected to generate 2.07 times more return on investment than QBE Insurance. However, Air Transport is 2.07 times more volatile than QBE Insurance Group. It trades about 0.15 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.04 per unit of risk. If you would invest 1,140 in Air Transport Services on September 12, 2024 and sell it today you would earn a total of 940.00 from holding Air Transport Services or generate 82.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. QBE Insurance Group
Performance |
| Timeline |
| Air Transport Services |
| QBE Insurance Group |
Air Transport and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and QBE Insurance
The main advantage of trading using opposite Air Transport and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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.| Air Transport vs. Aena SME SA | Air Transport vs. Superior Plus Corp | Air Transport vs. SIVERS SEMICONDUCTORS AB | Air Transport vs. Norsk Hydro ASA |
| QBE Insurance vs. Insurance Australia Group | QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. SIVERS SEMICONDUCTORS AB | QBE Insurance vs. CHINA HUARONG ENERHD 50 |
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 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.
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