Correlation Between Insignia Financial and Qbe Insurance

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Can any of the company-specific risk be diversified away by investing in both Insignia Financial 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 Insignia Financial and Qbe Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insignia Financial and Qbe Insurance Group, you can compare the effects of market volatilities on Insignia Financial 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 Insignia Financial with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insignia Financial and Qbe Insurance.

Diversification Opportunities for Insignia Financial and Qbe Insurance

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Insignia and Qbe is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial 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 Insignia Financial 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 Insignia Financial 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 Insignia Financial i.e., Insignia Financial and Qbe Insurance go up and down completely randomly.

Pair Corralation between Insignia Financial and Qbe Insurance

Assuming the 90 days trading horizon Insignia Financial is expected to generate 1.46 times more return on investment than Qbe Insurance. However, Insignia Financial is 1.46 times more volatile than Qbe Insurance Group. It trades about 0.19 of its potential returns per unit of risk. Qbe Insurance Group is currently generating about 0.17 per unit of risk. If you would invest  243.00  in Insignia Financial on September 13, 2024 and sell it today you would earn a total of  63.00  from holding Insignia Financial or generate 25.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Insignia Financial  vs.  Qbe Insurance Group

 Performance 
       Timeline  
Insignia Financial 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Insignia Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Insignia Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.
Qbe Insurance Group 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Qbe Insurance Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Qbe Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Insignia Financial and Qbe Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Insignia Financial and Qbe Insurance

The main advantage of trading using opposite Insignia Financial and Qbe Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial 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 Insignia Financial 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.
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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