Correlation Between ATT and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both ATT and QBE Insurance 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 ATT and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and QBE Insurance Group, you can compare the effects of market volatilities on ATT and QBE Insurance 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 ATT with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and QBE Insurance.
Diversification Opportunities for ATT and QBE Insurance
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ATT and QBE is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group and ATT 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 ATT Inc are associated (or correlated) with QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of ATT i.e., ATT and QBE Insurance go up and down completely randomly.
Pair Corralation between ATT and QBE Insurance
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.66 times more return on investment than QBE Insurance. However, ATT Inc is 1.53 times less risky than QBE Insurance. It trades about 0.05 of its potential returns per unit of risk. QBE Insurance Group is currently generating about -0.15 per unit of risk. If you would invest 2,618 in ATT Inc on January 4, 2025 and sell it today you would earn a total of 46.00 from holding ATT Inc or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. QBE Insurance Group
Performance |
| Timeline |
| ATT Inc |
| QBE Insurance Group |
ATT and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and QBE Insurance
The main advantage of trading using opposite ATT and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, QBE Insurance 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 QBE Insurance will offset losses from the drop in QBE Insurance's long position.The idea behind ATT Inc and QBE Insurance Group 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.| QBE Insurance vs. Heritage Insurance Hldgs | QBE Insurance vs. Universal Insurance Holdings | QBE Insurance vs. Kingstone Companies | QBE Insurance vs. HCI Group |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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