Correlation Between QBE Insurance and Admiral Group
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Admiral Group 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 Admiral Group 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 Admiral Group plc, you can compare the effects of market volatilities on QBE Insurance and Admiral Group 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 Admiral Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Admiral Group.
Diversification Opportunities for QBE Insurance and Admiral Group
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QBE and Admiral is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Admiral Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admiral Group plc 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 Admiral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admiral Group plc has no effect on the direction of QBE Insurance i.e., QBE Insurance and Admiral Group go up and down completely randomly.
Pair Corralation between QBE Insurance and Admiral Group
Assuming the 90 days horizon QBE Insurance is expected to generate 1.99 times less return on investment than Admiral Group. But when comparing it to its historical volatility, QBE Insurance Group is 1.21 times less risky than Admiral Group. It trades about 0.08 of its potential returns per unit of risk. Admiral Group plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,116 in Admiral Group plc on December 1, 2024 and sell it today you would earn a total of 372.00 from holding Admiral Group plc or generate 11.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
QBE Insurance Group vs. Admiral Group plc
Performance |
Timeline |
QBE Insurance Group |
Admiral Group plc |
QBE Insurance and Admiral Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with QBE Insurance and Admiral Group
The main advantage of trading using opposite QBE Insurance and Admiral Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Admiral Group 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 Admiral Group will offset losses from the drop in Admiral Group's long position.QBE Insurance vs. British American Tobacco | QBE Insurance vs. PARKEN SPORT ENT | QBE Insurance vs. Sportsmans Warehouse Holdings | QBE Insurance vs. UNIQA INSURANCE GR |
Admiral Group vs. Strategic Education | Admiral Group vs. Eidesvik Offshore ASA | Admiral Group vs. BW OFFSHORE LTD | Admiral Group vs. betterU Education Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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