Correlation Between QBE Insurance and Nexstar Broadcasting
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Nexstar Broadcasting 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 Nexstar Broadcasting 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 Nexstar Broadcasting Group, you can compare the effects of market volatilities on QBE Insurance and Nexstar Broadcasting 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 Nexstar Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Nexstar Broadcasting.
Diversification Opportunities for QBE Insurance and Nexstar Broadcasting
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between QBE and Nexstar is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting 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 Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of QBE Insurance i.e., QBE Insurance and Nexstar Broadcasting go up and down completely randomly.
Pair Corralation between QBE Insurance and Nexstar Broadcasting
Assuming the 90 days horizon QBE Insurance Group is expected to generate 1.08 times more return on investment than Nexstar Broadcasting. However, QBE Insurance is 1.08 times more volatile than Nexstar Broadcasting Group. It trades about 0.07 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about 0.02 per unit of risk. If you would invest 904.00 in QBE Insurance Group on September 12, 2024 and sell it today you would earn a total of 318.00 from holding QBE Insurance Group or generate 35.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.28% |
| Values | Daily Returns |
QBE Insurance Group vs. Nexstar Broadcasting Group
Performance |
| Timeline |
| QBE Insurance Group |
| Nexstar Broadcasting |
QBE Insurance and Nexstar Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Nexstar Broadcasting
The main advantage of trading using opposite QBE Insurance and Nexstar Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Nexstar Broadcasting 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 Nexstar Broadcasting will offset losses from the drop in Nexstar Broadcasting's long position.| QBE Insurance vs. Root Inc | QBE Insurance vs. Bank of America | QBE Insurance vs. Aerovate Therapeutics | QBE Insurance vs. SoundHound AI |
| Nexstar Broadcasting vs. News Corp B | Nexstar Broadcasting vs. Fox Corp Class | Nexstar Broadcasting vs. Liberty Media | Nexstar Broadcasting vs. AMC Networks |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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