Correlation Between Old Republic and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and QBE Insurance Group, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and QBE Insurance.
Diversification Opportunities for Old Republic and QBE Insurance
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and QBE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International 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 Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and QBE Insurance go up and down completely randomly.
Pair Corralation between Old Republic and QBE Insurance
Considering the 90-day investment horizon Old Republic International is expected to generate 0.45 times more return on investment than QBE Insurance. However, Old Republic International is 2.23 times less risky than QBE Insurance. It trades about 0.18 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.02 per unit of risk. If you would invest 3,519 in Old Republic International on August 25, 2024 and sell it today you would earn a total of 341.00 from holding Old Republic International or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. QBE Insurance Group
Performance |
| Timeline |
| Old Republic Interna |
| QBE Insurance Group |
Old Republic and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and QBE Insurance
The main advantage of trading using opposite Old Republic and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Fiverr International | Old Republic vs. Pinterest | Old Republic vs. Upstart Holdings | Old Republic vs. Fastly Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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