Correlation Between QBE Insurance and CDN IMPERIAL

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

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

Diversification Opportunities for QBE Insurance and CDN IMPERIAL

-0.63

Correlation Coefficient

QBE Insurance  CDN IMPERIAL

Excellent diversification

The 3 months correlation between QBE and CDN is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK and QBE Insurance 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 QBE Insurance Group are associated (or correlated) with CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of QBE Insurance i.e., QBE Insurance and CDN IMPERIAL go up and down completely randomly.

Pair Corralation between QBE Insurance and CDN IMPERIAL

Assuming the 90 days horizon QBE Insurance Group is expected to generate 1.09 times more return on investment than CDN IMPERIAL. However, QBE Insurance is 1.09 times more volatile than CDN IMPERIAL BANK. It trades about 0.15 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about -0.12 per unit of risk. If you would invest  1,117  in QBE Insurance Group on December 27, 2024 and sell it today you would earn a total of  183.00  from holding QBE Insurance Group or generate 16.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

QBE Insurance Group  vs.  CDN IMPERIAL BANK

QBE Insurance Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QBE Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

CDN IMPERIAL BANK

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDN IMPERIAL BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with QBE Insurance and CDN IMPERIAL

The main advantage of trading using opposite QBE Insurance and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.

The idea behind QBE Insurance Group and CDN IMPERIAL BANK 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.