Correlation Between CDN IMPERIAL and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL 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 CDN IMPERIAL and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDN IMPERIAL BANK and QBE Insurance Group, you can compare the effects of market volatilities on CDN IMPERIAL 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 CDN IMPERIAL with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and QBE Insurance.
Diversification Opportunities for CDN IMPERIAL and QBE Insurance
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CDN and QBE is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK 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 CDN IMPERIAL 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 CDN IMPERIAL BANK 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 CDN IMPERIAL i.e., CDN IMPERIAL and QBE Insurance go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and QBE Insurance
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.79 times more return on investment than QBE Insurance. However, CDN IMPERIAL BANK is 1.27 times less risky than QBE Insurance. It trades about 0.1 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.07 per unit of risk. If you would invest 3,470 in CDN IMPERIAL BANK on August 27, 2024 and sell it today you would earn a total of 2,798 from holding CDN IMPERIAL BANK or generate 80.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. QBE Insurance Group
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| QBE Insurance Group |
CDN IMPERIAL and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and QBE Insurance
The main advantage of trading using opposite CDN IMPERIAL and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL 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.| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Microsoft |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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