Correlation Between QBE Insurance and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and BRIT AMER 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 BRIT AMER 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 BRIT AMER TOBACCO, you can compare the effects of market volatilities on QBE Insurance and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and BRIT AMER.
Diversification Opportunities for QBE Insurance and BRIT AMER
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between QBE and BRIT is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of QBE Insurance i.e., QBE Insurance and BRIT AMER go up and down completely randomly.
Pair Corralation between QBE Insurance and BRIT AMER
Assuming the 90 days horizon QBE Insurance Group is expected to generate 1.22 times more return on investment than BRIT AMER. However, QBE Insurance is 1.22 times more volatile than BRIT AMER TOBACCO. It trades about 0.15 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.16 per unit of risk. If you would invest 1,060 in QBE Insurance Group on October 24, 2024 and sell it today you would earn a total of 130.00 from holding QBE Insurance Group or generate 12.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| QBE Insurance Group |
| BRIT AMER TOBACCO |
QBE Insurance and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and BRIT AMER
The main advantage of trading using opposite QBE Insurance and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| QBE Insurance vs. Tokyu Construction Co | QBE Insurance vs. DAIRY FARM INTL | QBE Insurance vs. Titan Machinery | QBE Insurance vs. CarsalesCom |
| BRIT AMER vs. OFFICE DEPOT | BRIT AMER vs. Focus Home Interactive | BRIT AMER vs. QBE Insurance Group | BRIT AMER vs. Haier Smart Home |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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