Correlation Between QBE Insurance and SOS
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and SOS 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 SOS 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 SOS LTD A, you can compare the effects of market volatilities on QBE Insurance and SOS 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 SOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and SOS.
Diversification Opportunities for QBE Insurance and SOS
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between QBE and SOS is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and SOS LTD A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS LTD A 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 SOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOS LTD A has no effect on the direction of QBE Insurance i.e., QBE Insurance and SOS go up and down completely randomly.
Pair Corralation between QBE Insurance and SOS
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.07 times more return on investment than SOS. However, QBE Insurance Group is 14.47 times less risky than SOS. It trades about -0.08 of its potential returns per unit of risk. SOS LTD A is currently generating about -0.01 per unit of risk. If you would invest 1,170 in QBE Insurance Group on September 16, 2024 and sell it today you would lose (30.00) from holding QBE Insurance Group or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
QBE Insurance Group vs. SOS LTD A
Performance |
| Timeline |
| QBE Insurance Group |
| SOS LTD A |
QBE Insurance and SOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and SOS
The main advantage of trading using opposite QBE Insurance and SOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, SOS 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 SOS will offset losses from the drop in SOS's long position.| QBE Insurance vs. Insurance Australia Group | QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. SIVERS SEMICONDUCTORS AB | QBE Insurance vs. CHINA HUARONG ENERHD 50 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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