Correlation Between Travelers Companies and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Travelers Companies 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 Travelers Companies and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and QBE Insurance Group, you can compare the effects of market volatilities on Travelers Companies 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 Travelers Companies with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and QBE Insurance.
Diversification Opportunities for Travelers Companies and QBE Insurance
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and QBE is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies 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 Travelers Companies 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 The Travelers Companies 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 Travelers Companies i.e., Travelers Companies and QBE Insurance go up and down completely randomly.
Pair Corralation between Travelers Companies and QBE Insurance
Considering the 90-day investment horizon The Travelers Companies is expected to generate 1.05 times more return on investment than QBE Insurance. However, Travelers Companies is 1.05 times more volatile than QBE Insurance Group. It trades about 0.14 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.12 per unit of risk. If you would invest 23,611 in The Travelers Companies on August 28, 2024 and sell it today you would earn a total of 2,766 from holding The Travelers Companies or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. QBE Insurance Group
Performance |
| Timeline |
| The Travelers Companies |
| QBE Insurance Group |
Travelers Companies and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and QBE Insurance
The main advantage of trading using opposite Travelers Companies and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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.| Travelers Companies vs. Fiverr International | Travelers Companies vs. Pinterest | Travelers Companies vs. Upstart Holdings | Travelers Companies vs. Fastly Inc |
| QBE Insurance vs. Progressive Corp | QBE Insurance vs. White Mountains Insurance | QBE Insurance vs. Chubb | QBE Insurance vs. W R Berkley |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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