Correlation Between QBE Insurance and Cabot
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Cabot 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 Cabot 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 Cabot, you can compare the effects of market volatilities on QBE Insurance and Cabot 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 Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Cabot.
Diversification Opportunities for QBE Insurance and Cabot
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between QBE and Cabot is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot 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 Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of QBE Insurance i.e., QBE Insurance and Cabot go up and down completely randomly.
Pair Corralation between QBE Insurance and Cabot
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.76 times more return on investment than Cabot. However, QBE Insurance Group is 1.31 times less risky than Cabot. It trades about 0.12 of its potential returns per unit of risk. Cabot is currently generating about -0.36 per unit of risk. If you would invest 1,130 in QBE Insurance Group on October 11, 2024 and sell it today you would earn a total of 60.00 from holding QBE Insurance Group or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.44% |
| Values | Daily Returns |
QBE Insurance Group vs. Cabot
Performance |
| Timeline |
| QBE Insurance Group |
| Cabot |
QBE Insurance and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Cabot
The main advantage of trading using opposite QBE Insurance and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| QBE Insurance vs. OURGAME INTHOLDL 00005 | QBE Insurance vs. DETALION GAMES SA | QBE Insurance vs. Suntory Beverage Food | QBE Insurance vs. PENN NATL GAMING |
| Cabot vs. QBE Insurance Group | Cabot vs. Insurance Australia Group | Cabot vs. FUYO GENERAL LEASE | Cabot vs. SBI Insurance 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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