Correlation Between QBE Insurance and ICC Holdings
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and ICC Holdings 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 ICC Holdings 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 ICC Holdings, you can compare the effects of market volatilities on QBE Insurance and ICC Holdings 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 ICC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and ICC Holdings.
Diversification Opportunities for QBE Insurance and ICC Holdings
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between QBE and ICC is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC Holdings 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 ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of QBE Insurance i.e., QBE Insurance and ICC Holdings go up and down completely randomly.
Pair Corralation between QBE Insurance and ICC Holdings
Assuming the 90 days horizon QBE Insurance Group is expected to generate 2.53 times more return on investment than ICC Holdings. However, QBE Insurance is 2.53 times more volatile than ICC Holdings. It trades about 0.21 of its potential returns per unit of risk. ICC Holdings is currently generating about 0.08 per unit of risk. If you would invest 1,115 in QBE Insurance Group on August 28, 2024 and sell it today you would earn a total of 50.00 from holding QBE Insurance Group or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
QBE Insurance Group vs. ICC Holdings
Performance |
| Timeline |
| QBE Insurance Group |
| ICC Holdings |
QBE Insurance and ICC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and ICC Holdings
The main advantage of trading using opposite QBE Insurance and ICC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, ICC Holdings 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 ICC Holdings will offset losses from the drop in ICC Holdings' long position.The idea behind QBE Insurance Group and ICC Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ICC Holdings vs. Investors Title | ICC Holdings vs. AMERISAFE | ICC Holdings vs. Essent Group | ICC Holdings vs. MGIC Investment Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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