Correlation Between QBE Insurance and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and CarsalesCom 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 CarsalesCom 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 CarsalesCom, you can compare the effects of market volatilities on QBE Insurance and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and CarsalesCom.
Diversification Opportunities for QBE Insurance and CarsalesCom
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between QBE and CarsalesCom is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of QBE Insurance i.e., QBE Insurance and CarsalesCom go up and down completely randomly.
Pair Corralation between QBE Insurance and CarsalesCom
Assuming the 90 days horizon QBE Insurance is expected to generate 1.31 times less return on investment than CarsalesCom. In addition to that, QBE Insurance is 1.0 times more volatile than CarsalesCom. It trades about 0.07 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.09 per unit of volatility. If you would invest 1,264 in CarsalesCom on August 29, 2024 and sell it today you would earn a total of 1,236 from holding CarsalesCom or generate 97.78% 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. CarsalesCom
Performance |
| Timeline |
| QBE Insurance Group |
| CarsalesCom |
QBE Insurance and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and CarsalesCom
The main advantage of trading using opposite QBE Insurance and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| QBE Insurance vs. Darden Restaurants | QBE Insurance vs. AIR PRODCHEMICALS | QBE Insurance vs. Japan Tobacco | QBE Insurance vs. Strategic Education |
| CarsalesCom vs. AM EAGLE OUTFITTERS | CarsalesCom vs. RYU Apparel | CarsalesCom vs. Cal Maine Foods | CarsalesCom vs. SCIENCE IN SPORT |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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