Correlation Between QBE Insurance and NORFOLK

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Can any of the company-specific risk be diversified away by investing in both QBE Insurance and NORFOLK 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 NORFOLK 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 NORFOLK SOUTHN P, you can compare the effects of market volatilities on QBE Insurance and NORFOLK 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 NORFOLK. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and NORFOLK.

Diversification Opportunities for QBE Insurance and NORFOLK

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between QBE and NORFOLK is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and NORFOLK SOUTHN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORFOLK SOUTHN P 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 NORFOLK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORFOLK SOUTHN P has no effect on the direction of QBE Insurance i.e., QBE Insurance and NORFOLK go up and down completely randomly.

Pair Corralation between QBE Insurance and NORFOLK

Assuming the 90 days horizon QBE Insurance Group is expected to generate 3.02 times more return on investment than NORFOLK. However, QBE Insurance is 3.02 times more volatile than NORFOLK SOUTHN P. It trades about 0.04 of its potential returns per unit of risk. NORFOLK SOUTHN P 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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy91.27%
ValuesDaily Returns

QBE Insurance Group  vs.  NORFOLK SOUTHN P

 Performance 
       Timeline  
QBE Insurance Group 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, QBE Insurance reported solid returns over the last few months and may actually be approaching a breakup point.
NORFOLK SOUTHN P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NORFOLK SOUTHN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NORFOLK SOUTHN P investors.

QBE Insurance and NORFOLK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with QBE Insurance and NORFOLK

The main advantage of trading using opposite QBE Insurance and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, NORFOLK 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 NORFOLK will offset losses from the drop in NORFOLK's long position.
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The idea behind QBE Insurance Group and NORFOLK SOUTHN P 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.
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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