Correlation Between Insurance Australia and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Insurance Australia 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 Insurance Australia and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insurance Australia Group and QBE Insurance Group, you can compare the effects of market volatilities on Insurance Australia 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 Insurance Australia with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and QBE Insurance.
Diversification Opportunities for Insurance Australia and QBE Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insurance and QBE is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group 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 Insurance Australia 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 Insurance Australia Group 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 Insurance Australia i.e., Insurance Australia and QBE Insurance go up and down completely randomly.
Pair Corralation between Insurance Australia and QBE Insurance
Assuming the 90 days horizon Insurance Australia Group is expected to generate 1.1 times more return on investment than QBE Insurance. However, Insurance Australia is 1.1 times more volatile than QBE Insurance Group. It trades about 0.08 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.07 per unit of risk. If you would invest 319.00 in Insurance Australia Group on August 28, 2024 and sell it today you would earn a total of 179.00 from holding Insurance Australia Group or generate 56.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. QBE Insurance Group
Performance |
| Timeline |
| Insurance Australia |
| QBE Insurance Group |
Insurance Australia and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and QBE Insurance
The main advantage of trading using opposite Insurance Australia and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia 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.| Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. NMI Holdings | Insurance Australia vs. Origin Agritech | Insurance Australia vs. SIVERS SEMICONDUCTORS AB |
| QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. NMI Holdings | QBE Insurance vs. Origin Agritech | QBE Insurance vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |