Correlation Between QBE Insurance and Southern
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Southern 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 Southern 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 Southern Co, you can compare the effects of market volatilities on QBE Insurance and Southern 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 Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Southern.
Diversification Opportunities for QBE Insurance and Southern
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between QBE and Southern is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of QBE Insurance i.e., QBE Insurance and Southern go up and down completely randomly.
Pair Corralation between QBE Insurance and Southern
Assuming the 90 days horizon QBE Insurance Group is expected to generate 3.26 times more return on investment than Southern. However, QBE Insurance is 3.26 times more volatile than Southern Co. It trades about 0.04 of its potential returns per unit of risk. Southern Co is currently generating about 0.01 per unit of risk. If you would invest 1,023 in QBE Insurance Group on September 12, 2024 and sell it today you would earn a total of 199.00 from holding QBE Insurance Group or generate 19.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 65.06% |
| Values | Daily Returns |
QBE Insurance Group vs. Southern Co
Performance |
| Timeline |
| QBE Insurance Group |
| Southern |
QBE Insurance and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Southern
The main advantage of trading using opposite QBE Insurance and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| QBE Insurance vs. Root Inc | QBE Insurance vs. Bank of America | QBE Insurance vs. Aerovate Therapeutics | QBE Insurance vs. SoundHound AI |
| Southern vs. Old Republic International | Southern vs. Cincinnati Financial | Southern vs. QBE Insurance Group | Southern vs. Sphere Entertainment Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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