Correlation Between Commonwealth Bank and Qbe Insurance
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank 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 Commonwealth Bank and Qbe Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and Qbe Insurance Group, you can compare the effects of market volatilities on Commonwealth Bank 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 Commonwealth Bank with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Qbe Insurance.
Diversification Opportunities for Commonwealth Bank and Qbe Insurance
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Commonwealth and Qbe is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of 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 Commonwealth Bank 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 Commonwealth Bank of 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 Commonwealth Bank i.e., Commonwealth Bank and Qbe Insurance go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Qbe Insurance
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 5.07 times less return on investment than Qbe Insurance. But when comparing it to its historical volatility, Commonwealth Bank of is 3.35 times less risky than Qbe Insurance. It trades about 0.08 of its potential returns per unit of risk. Qbe Insurance Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,388 in Qbe Insurance Group on September 4, 2024 and sell it today you would earn a total of 636.00 from holding Qbe Insurance Group or generate 45.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Qbe Insurance Group
Performance |
| Timeline |
| Commonwealth Bank |
| Qbe Insurance Group |
Commonwealth Bank and Qbe Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Qbe Insurance
The main advantage of trading using opposite Commonwealth Bank and Qbe Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank 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.| Commonwealth Bank vs. Mount Gibson Iron | Commonwealth Bank vs. Viva Leisure | Commonwealth Bank vs. Champion Iron | Commonwealth Bank vs. Autosports Group |
| Qbe Insurance vs. Aneka Tambang Tbk | Qbe Insurance vs. Commonwealth Bank | Qbe Insurance vs. Commonwealth Bank of | Qbe Insurance vs. Australia and New |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |