Correlation Between Disney and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Disney 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 Disney and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and QBE Insurance Group, you can compare the effects of market volatilities on Disney 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 Disney with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and QBE Insurance.
Diversification Opportunities for Disney and QBE Insurance
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Disney and QBE is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney 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 Disney 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 Walt Disney 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 Disney i.e., Disney and QBE Insurance go up and down completely randomly.
Pair Corralation between Disney and QBE Insurance
Considering the 90-day investment horizon Walt Disney is expected to generate 0.9 times more return on investment than QBE Insurance. However, Walt Disney is 1.11 times less risky than QBE Insurance. It trades about 0.27 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.12 per unit of risk. If you would invest 9,601 in Walt Disney on August 28, 2024 and sell it today you would earn a total of 1,944 from holding Walt Disney or generate 20.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. QBE Insurance Group
Performance |
| Timeline |
| Walt Disney |
| QBE Insurance Group |
Disney and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and QBE Insurance
The main advantage of trading using opposite Disney and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| QBE Insurance vs. Progressive Corp | QBE Insurance vs. White Mountains Insurance | QBE Insurance vs. Chubb | QBE Insurance vs. W R Berkley |
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 CEOs Directory module to screen CEOs from public companies around the world.
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