Correlation Between Citigroup and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and QBE Insurance Group, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and QBE Insurance.
Diversification Opportunities for Citigroup and QBE Insurance
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and QBE is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup 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 Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and QBE Insurance go up and down completely randomly.
Pair Corralation between Citigroup and QBE Insurance
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.4 times less return on investment than QBE Insurance. In addition to that, Citigroup is 1.47 times more volatile than QBE Insurance Group. It trades about 0.15 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about 0.32 per unit of volatility. If you would invest 1,010 in QBE Insurance Group on August 28, 2024 and sell it today you would earn a total of 210.00 from holding QBE Insurance Group or generate 20.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. QBE Insurance Group
Performance |
| Timeline |
| Citigroup |
| QBE Insurance Group |
Citigroup and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and QBE Insurance
The main advantage of trading using opposite Citigroup and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.The idea behind Citigroup and QBE Insurance Group 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.| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |