Correlation Between National Retail and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both National Retail 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 National Retail and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and QBE Insurance Group, you can compare the effects of market volatilities on National Retail 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 National Retail with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and QBE Insurance.
Diversification Opportunities for National Retail and QBE Insurance
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and QBE is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties 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 National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and QBE Insurance go up and down completely randomly.
Pair Corralation between National Retail and QBE Insurance
Assuming the 90 days trading horizon National Retail is expected to generate 1.33 times less return on investment than QBE Insurance. But when comparing it to its historical volatility, National Retail Properties is 1.22 times less risky than QBE Insurance. It trades about 0.06 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,073 in QBE Insurance Group on September 3, 2024 and sell it today you would earn a total of 147.00 from holding QBE Insurance Group or generate 13.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. QBE Insurance Group
Performance |
| Timeline |
| National Retail Prop |
| QBE Insurance Group |
National Retail and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and QBE Insurance
The main advantage of trading using opposite National Retail and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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.| National Retail vs. QBE Insurance Group | National Retail vs. United Natural Foods | National Retail vs. TYSON FOODS A | National Retail vs. Luckin Coffee |
| QBE Insurance vs. INFORMATION SVC GRP | QBE Insurance vs. Fidelity National Information | QBE Insurance vs. PUBLIC STORAGE PRFO | QBE Insurance vs. DOCDATA |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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