Correlation Between TFS FINANCIAL and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both TFS FINANCIAL 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 TFS FINANCIAL and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFS FINANCIAL and QBE Insurance Group, you can compare the effects of market volatilities on TFS FINANCIAL 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 TFS FINANCIAL with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS FINANCIAL and QBE Insurance.
Diversification Opportunities for TFS FINANCIAL and QBE Insurance
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TFS and QBE is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL 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 TFS FINANCIAL 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 TFS FINANCIAL 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 TFS FINANCIAL i.e., TFS FINANCIAL and QBE Insurance go up and down completely randomly.
Pair Corralation between TFS FINANCIAL and QBE Insurance
Assuming the 90 days trading horizon TFS FINANCIAL is expected to generate 1.69 times less return on investment than QBE Insurance. In addition to that, TFS FINANCIAL is 1.79 times more volatile than QBE Insurance Group. It trades about 0.17 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about 0.52 per unit of volatility. If you would invest 1,030 in QBE Insurance Group on September 1, 2024 and sell it today you would earn a total of 190.00 from holding QBE Insurance Group or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFS FINANCIAL vs. QBE Insurance Group
Performance |
| Timeline |
| TFS FINANCIAL |
| QBE Insurance Group |
TFS FINANCIAL and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFS FINANCIAL and QBE Insurance
The main advantage of trading using opposite TFS FINANCIAL and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS FINANCIAL 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.| TFS FINANCIAL vs. Infrastrutture Wireless Italiane | TFS FINANCIAL vs. Sumitomo Chemical | TFS FINANCIAL vs. Sekisui Chemical Co | TFS FINANCIAL vs. 24SEVENOFFICE GROUP AB |
| QBE Insurance vs. Sumitomo Rubber Industries | QBE Insurance vs. SANOK RUBBER ZY | QBE Insurance vs. Applied Materials | QBE Insurance vs. NEWELL RUBBERMAID |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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