Correlation Between QBE Insurance and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and CDN IMPERIAL 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 CDN IMPERIAL 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 CDN IMPERIAL BANK, you can compare the effects of market volatilities on QBE Insurance and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and CDN IMPERIAL.
Diversification Opportunities for QBE Insurance and CDN IMPERIAL
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between QBE and CDN is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of QBE Insurance i.e., QBE Insurance and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between QBE Insurance and CDN IMPERIAL
Assuming the 90 days horizon QBE Insurance Group is expected to generate 1.83 times more return on investment than CDN IMPERIAL. However, QBE Insurance is 1.83 times more volatile than CDN IMPERIAL BANK. It trades about 0.38 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.26 per unit of risk. If you would invest 1,040 in QBE Insurance Group on August 30, 2024 and sell it today you would earn a total of 150.00 from holding QBE Insurance Group or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| QBE Insurance Group |
| CDN IMPERIAL BANK |
QBE Insurance and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and CDN IMPERIAL
The main advantage of trading using opposite QBE Insurance and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| QBE Insurance vs. PICC Property and | QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. SIVERS SEMICONDUCTORS AB | QBE Insurance vs. Talanx AG |
| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Superior Plus Corp | CDN IMPERIAL vs. SIVERS SEMICONDUCTORS AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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