Correlation Between QBE Insurance and TFS FINANCIAL
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and TFS 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 TFS 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 TFS FINANCIAL, you can compare the effects of market volatilities on QBE Insurance and TFS 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 TFS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and TFS FINANCIAL.
Diversification Opportunities for QBE Insurance and TFS FINANCIAL
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between QBE and TFS is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS 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 TFS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFS FINANCIAL has no effect on the direction of QBE Insurance i.e., QBE Insurance and TFS FINANCIAL go up and down completely randomly.
Pair Corralation between QBE Insurance and TFS FINANCIAL
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.56 times more return on investment than TFS FINANCIAL. However, QBE Insurance Group is 1.79 times less risky than TFS FINANCIAL. It trades about 0.52 of its potential returns per unit of risk. TFS FINANCIAL is currently generating about 0.17 per unit of risk. If you would invest 1,030 in QBE Insurance Group on September 1, 2024 and sell it today you would earn a total of 190.00 from holding QBE Insurance Group or generate 18.45% 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. TFS FINANCIAL
Performance |
| Timeline |
| QBE Insurance Group |
| TFS FINANCIAL |
QBE Insurance and TFS FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and TFS FINANCIAL
The main advantage of trading using opposite QBE Insurance and TFS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, TFS 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 TFS FINANCIAL will offset losses from the drop in TFS FINANCIAL's long position.| QBE Insurance vs. Sumitomo Rubber Industries | QBE Insurance vs. SANOK RUBBER ZY | QBE Insurance vs. Applied Materials | QBE Insurance vs. NEWELL RUBBERMAID |
| TFS FINANCIAL vs. Infrastrutture Wireless Italiane | TFS FINANCIAL vs. Sumitomo Chemical | TFS FINANCIAL vs. Sekisui Chemical Co | TFS FINANCIAL vs. 24SEVENOFFICE GROUP 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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