Correlation Between Qbe Insurance and Capitol Health
Can any of the company-specific risk be diversified away by investing in both Qbe Insurance and Capitol Health 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 Qbe Insurance and Capitol Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qbe Insurance Group and Capitol Health, you can compare the effects of market volatilities on Qbe Insurance and Capitol Health 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 Qbe Insurance with a short position of Capitol Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qbe Insurance and Capitol Health.
Diversification Opportunities for Qbe Insurance and Capitol Health
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Qbe and Capitol is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Qbe Insurance Group and Capitol Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Health and Qbe Insurance 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 Qbe Insurance Group are associated (or correlated) with Capitol Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Health has no effect on the direction of Qbe Insurance i.e., Qbe Insurance and Capitol Health go up and down completely randomly.
Pair Corralation between Qbe Insurance and Capitol Health
Assuming the 90 days trading horizon Qbe Insurance Group is expected to generate 0.59 times more return on investment than Capitol Health. However, Qbe Insurance Group is 1.69 times less risky than Capitol Health. It trades about 0.37 of its potential returns per unit of risk. Capitol Health is currently generating about -0.08 per unit of risk. If you would invest 1,727 in Qbe Insurance Group on August 30, 2024 and sell it today you would earn a total of 249.00 from holding Qbe Insurance Group or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Qbe Insurance Group vs. Capitol Health
Performance |
| Timeline |
| Qbe Insurance Group |
| Capitol Health |
Qbe Insurance and Capitol Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qbe Insurance and Capitol Health
The main advantage of trading using opposite Qbe Insurance and Capitol Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qbe Insurance position performs unexpectedly, Capitol Health 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 Capitol Health will offset losses from the drop in Capitol Health's long position.| Qbe Insurance vs. Premier Investments | Qbe Insurance vs. Retail Food Group | Qbe Insurance vs. REGAL ASIAN INVESTMENTS | Qbe Insurance vs. BKI Investment |
| Capitol Health vs. Cochlear | Capitol Health vs. Rea Group | Capitol Health vs. CSL | Capitol Health vs. Macquarie Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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