Correlation Between QBE Insurance and GOODYEAR T
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and GOODYEAR T 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 GOODYEAR T 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 GOODYEAR T RUBBER, you can compare the effects of market volatilities on QBE Insurance and GOODYEAR T 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 GOODYEAR T. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and GOODYEAR T.
Diversification Opportunities for QBE Insurance and GOODYEAR T
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between QBE and GOODYEAR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER 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 GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of QBE Insurance i.e., QBE Insurance and GOODYEAR T go up and down completely randomly.
Pair Corralation between QBE Insurance and GOODYEAR T
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.57 times more return on investment than GOODYEAR T. However, QBE Insurance Group is 1.75 times less risky than GOODYEAR T. It trades about 0.07 of its potential returns per unit of risk. GOODYEAR T RUBBER is currently generating about 0.01 per unit of risk. If you would invest 731.00 in QBE Insurance Group on August 26, 2024 and sell it today you would earn a total of 469.00 from holding QBE Insurance Group or generate 64.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. GOODYEAR T RUBBER
Performance |
| Timeline |
| QBE Insurance Group |
| GOODYEAR T RUBBER |
QBE Insurance and GOODYEAR T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and GOODYEAR T
The main advantage of trading using opposite QBE Insurance and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, GOODYEAR T 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 GOODYEAR T will offset losses from the drop in GOODYEAR T's long position.| QBE Insurance vs. Insurance Australia Group | QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. NMI Holdings | QBE Insurance vs. Origin Agritech |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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