Correlation Between QBE Insurance and Volkswagen
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on QBE Insurance and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Volkswagen.
Diversification Opportunities for QBE Insurance and Volkswagen
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between QBE and Volkswagen is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of QBE Insurance i.e., QBE Insurance and Volkswagen go up and down completely randomly.
Pair Corralation between QBE Insurance and Volkswagen
Assuming the 90 days horizon QBE Insurance Group is expected to under-perform the Volkswagen. In addition to that, QBE Insurance is 1.06 times more volatile than Volkswagen AG. It trades about -0.23 of its total potential returns per unit of risk. Volkswagen AG is currently generating about 0.2 per unit of volatility. If you would invest 8,240 in Volkswagen AG on September 25, 2024 and sell it today you would earn a total of 464.00 from holding Volkswagen AG or generate 5.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
QBE Insurance Group vs. Volkswagen AG
Performance |
Timeline |
QBE Insurance Group |
Volkswagen AG |
QBE Insurance and Volkswagen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with QBE Insurance and Volkswagen
The main advantage of trading using opposite QBE Insurance and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.QBE Insurance vs. The Progressive | QBE Insurance vs. The Allstate | QBE Insurance vs. PICC Property and | QBE Insurance vs. Cincinnati Financial |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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