Correlation Between BW OFFSHORE and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE 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 BW OFFSHORE and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW OFFSHORE LTD and QBE Insurance Group, you can compare the effects of market volatilities on BW OFFSHORE 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 BW OFFSHORE with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and QBE Insurance.
Diversification Opportunities for BW OFFSHORE and QBE Insurance
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between XY81 and QBE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD 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 BW OFFSHORE 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 BW OFFSHORE LTD 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 BW OFFSHORE i.e., BW OFFSHORE and QBE Insurance go up and down completely randomly.
Pair Corralation between BW OFFSHORE and QBE Insurance
Assuming the 90 days trading horizon BW OFFSHORE is expected to generate 1.24 times less return on investment than QBE Insurance. In addition to that, BW OFFSHORE is 1.53 times more volatile than QBE Insurance Group. It trades about 0.04 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about 0.08 per unit of volatility. If you would invest 1,024 in QBE Insurance Group on September 3, 2024 and sell it today you would earn a total of 196.00 from holding QBE Insurance Group or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. QBE Insurance Group
Performance |
| Timeline |
| BW OFFSHORE LTD |
| QBE Insurance Group |
BW OFFSHORE and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and QBE Insurance
The main advantage of trading using opposite BW OFFSHORE and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE 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.| BW OFFSHORE vs. Halliburton | BW OFFSHORE vs. Superior Plus Corp | BW OFFSHORE vs. NMI Holdings | BW OFFSHORE vs. Origin Agritech |
| QBE Insurance vs. INFORMATION SVC GRP | QBE Insurance vs. Fidelity National Information | QBE Insurance vs. PUBLIC STORAGE PRFO | QBE Insurance vs. DOCDATA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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