Correlation Between QBE Insurance and Markel

Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Markel 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 Markel 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 Markel, you can compare the effects of market volatilities on QBE Insurance and Markel 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 Markel. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Markel.

Diversification Opportunities for QBE Insurance and Markel

0.98

Correlation Coefficient

QBE Insurance  Markel

Almost no diversification

The 3 months correlation between QBE and Markel is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel 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 Markel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel has no effect on the direction of QBE Insurance i.e., QBE Insurance and Markel go up and down completely randomly.

Pair Corralation between QBE Insurance and Markel

Assuming the 90 days horizon QBE Insurance is expected to generate 1.13 times less return on investment than Markel. But when comparing it to its historical volatility, QBE Insurance Group is 1.03 times less risky than Markel. It trades about 0.2 of its potential returns per unit of risk. Markel is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  138,500  in Markel on September 13, 2024 and sell it today you would earn a total of  28,500  from holding Markel or generate 20.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

QBE Insurance Group  vs.  Markel

QBE Insurance Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 15 (%) 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.

Markel

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Markel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QBE Insurance and Markel

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

The idea behind QBE Insurance Group and Markel 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 CEOs Directory module to screen CEOs from public companies around the world.