Correlation Between National Bank and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both National 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 National 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 National Bank Holdings and QBE Insurance Group, you can compare the effects of market volatilities on National 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 National Bank with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and QBE Insurance.
Diversification Opportunities for National Bank and QBE Insurance
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and QBE is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings 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 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 National Bank Holdings 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 Bank i.e., National Bank and QBE Insurance go up and down completely randomly.
Pair Corralation between National Bank and QBE Insurance
Assuming the 90 days horizon National Bank Holdings is expected to generate 1.38 times more return on investment than QBE Insurance. However, National Bank is 1.38 times more volatile than QBE Insurance Group. It trades about 0.09 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.09 per unit of risk. If you would invest 2,829 in National Bank Holdings on August 24, 2024 and sell it today you would earn a total of 1,531 from holding National Bank Holdings or generate 54.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. QBE Insurance Group
Performance |
| Timeline |
| National Bank Holdings |
| QBE Insurance Group |
National Bank and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and QBE Insurance
The main advantage of trading using opposite National Bank and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National 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.| National Bank vs. Regions Financial | National Bank vs. Superior Plus Corp | National Bank vs. NMI Holdings | National Bank vs. Origin Agritech |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |