Correlation Between BCE and QBE Insurance

Can any of the company-specific risk be diversified away by investing in both BCE 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 BCE and QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BCE Inc and QBE Insurance Group, you can compare the effects of market volatilities on BCE 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 BCE with a short position of QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and QBE Insurance.

Diversification Opportunities for BCE and QBE Insurance

-0.64

Correlation Coefficient

BCE  QBE Insurance

Excellent diversification

The 3 months correlation between BCE and QBE is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding BCE 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 BCE 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 BCE 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 BCE i.e., BCE and QBE Insurance go up and down completely randomly.

Pair Corralation between BCE and QBE Insurance

Considering the 90-day investment horizon BCE Inc is expected to under-perform the QBE Insurance. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 2.13 times less risky than QBE Insurance. The stock trades about -0.56 of its potential returns per unit of risk. The QBE Insurance Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,165  in QBE Insurance Group on September 24, 2024 and sell it today you would earn a total of  25.00  from holding QBE Insurance Group or generate 2.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

BCE Inc  vs.  QBE Insurance Group

BCE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

QBE Insurance Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, QBE Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BCE and QBE Insurance

The main advantage of trading using opposite BCE and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE 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 BCE 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.