Correlation Between QBE Insurance and Old Republic
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Old Republic 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 Old Republic 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 Old Republic International, you can compare the effects of market volatilities on QBE Insurance and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Old Republic.
Diversification Opportunities for QBE Insurance and Old Republic
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QBE and Old is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of QBE Insurance i.e., QBE Insurance and Old Republic go up and down completely randomly.
Pair Corralation between QBE Insurance and Old Republic
Assuming the 90 days horizon QBE Insurance is expected to generate 2.27 times less return on investment than Old Republic. But when comparing it to its historical volatility, QBE Insurance Group is 1.39 times less risky than Old Republic. It trades about 0.21 of its potential returns per unit of risk. Old Republic International is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,493 in Old Republic International on August 25, 2024 and sell it today you would earn a total of 367.00 from holding Old Republic International or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. Old Republic International
Performance |
| Timeline |
| QBE Insurance Group |
| Old Republic Interna |
QBE Insurance and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Old Republic
The main advantage of trading using opposite QBE Insurance and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.The idea behind QBE Insurance Group and Old Republic International 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.| Old Republic vs. Fiverr International | Old Republic vs. Pinterest | Old Republic vs. Upstart Holdings | Old Republic vs. Fastly Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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