Correlation Between QBE Insurance and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Cincinnati Financial 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 Cincinnati Financial 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 Cincinnati Financial, you can compare the effects of market volatilities on QBE Insurance and Cincinnati Financial 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 Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Cincinnati Financial.
Diversification Opportunities for QBE Insurance and Cincinnati Financial
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between QBE and Cincinnati is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial 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 Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial has no effect on the direction of QBE Insurance i.e., QBE Insurance and Cincinnati Financial go up and down completely randomly.
Pair Corralation between QBE Insurance and Cincinnati Financial
Assuming the 90 days horizon QBE Insurance is expected to generate 1.18 times less return on investment than Cincinnati Financial. In addition to that, QBE Insurance is 1.06 times more volatile than Cincinnati Financial. It trades about 0.12 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about 0.15 per unit of volatility. If you would invest 9,251 in Cincinnati Financial on September 4, 2024 and sell it today you would earn a total of 5,844 from holding Cincinnati Financial or generate 63.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
QBE Insurance Group vs. Cincinnati Financial
Performance |
| Timeline |
| QBE Insurance Group |
| Cincinnati Financial |
QBE Insurance and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Cincinnati Financial
The main advantage of trading using opposite QBE Insurance and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.| QBE Insurance vs. Hitachi Construction Machinery | QBE Insurance vs. INDOFOOD AGRI RES | QBE Insurance vs. Lery Seafood Group | QBE Insurance vs. HF FOODS GRP |
| Cincinnati Financial vs. ELMOS SEMICONDUCTOR | Cincinnati Financial vs. Elmos Semiconductor SE | Cincinnati Financial vs. JJ SNACK FOODS | Cincinnati Financial vs. INDOFOOD AGRI RES |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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