Correlation Between QBE Insurance and Mitsubishi Estate
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Mitsubishi Estate 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 Mitsubishi Estate 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 Mitsubishi Estate Co, you can compare the effects of market volatilities on QBE Insurance and Mitsubishi Estate 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 Mitsubishi Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Mitsubishi Estate.
Diversification Opportunities for QBE Insurance and Mitsubishi Estate
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between QBE and Mitsubishi is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Mitsubishi Estate Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Estate 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 Mitsubishi Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Estate has no effect on the direction of QBE Insurance i.e., QBE Insurance and Mitsubishi Estate go up and down completely randomly.
Pair Corralation between QBE Insurance and Mitsubishi Estate
Assuming the 90 days horizon QBE Insurance Group is expected to generate 1.64 times more return on investment than Mitsubishi Estate. However, QBE Insurance is 1.64 times more volatile than Mitsubishi Estate Co. It trades about 0.27 of its potential returns per unit of risk. Mitsubishi Estate Co is currently generating about -0.23 per unit of risk. If you would invest 1,147 in QBE Insurance Group on August 28, 2024 and sell it today you would earn a total of 142.00 from holding QBE Insurance Group or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. Mitsubishi Estate Co
Performance |
| Timeline |
| QBE Insurance Group |
| Mitsubishi Estate |
QBE Insurance and Mitsubishi Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Mitsubishi Estate
The main advantage of trading using opposite QBE Insurance and Mitsubishi Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Mitsubishi Estate 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 Mitsubishi Estate will offset losses from the drop in Mitsubishi Estate's long position.| QBE Insurance vs. Heritage Insurance Hldgs | QBE Insurance vs. Universal Insurance Holdings | QBE Insurance vs. Kingstone Companies | QBE Insurance vs. HCI Group |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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