Correlation Between CHIBA BANK and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both CHIBA 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 CHIBA 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 CHIBA BANK and QBE Insurance Group, you can compare the effects of market volatilities on CHIBA 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 CHIBA BANK with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIBA BANK and QBE Insurance.
Diversification Opportunities for CHIBA BANK and QBE Insurance
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHIBA and QBE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CHIBA 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 CHIBA 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 CHIBA 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 CHIBA BANK i.e., CHIBA BANK and QBE Insurance go up and down completely randomly.
Pair Corralation between CHIBA BANK and QBE Insurance
Assuming the 90 days trading horizon CHIBA BANK is expected to generate 1.52 times less return on investment than QBE Insurance. In addition to that, CHIBA BANK is 1.86 times more volatile than QBE Insurance Group. It trades about 0.01 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about 0.04 per unit of volatility. If you would invest 1,102 in QBE Insurance Group on September 12, 2024 and sell it today you would earn a total of 78.00 from holding QBE Insurance Group or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHIBA BANK vs. QBE Insurance Group
Performance |
| Timeline |
| CHIBA BANK |
| QBE Insurance Group |
CHIBA BANK and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHIBA BANK and QBE Insurance
The main advantage of trading using opposite CHIBA BANK and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIBA 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.The idea behind CHIBA BANK 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. 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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