Correlation Between QBE Insurance and Fomo Worldwide

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

Diversification Opportunities for QBE Insurance and Fomo Worldwide

-0.71

Correlation Coefficient

QBE Insurance  Fomo Worldwide

Pay attention - limited upside

The 3 months correlation between QBE and Fomo is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Fomo Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomo Worldwide 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 Fomo Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomo Worldwide has no effect on the direction of QBE Insurance i.e., QBE Insurance and Fomo Worldwide go up and down completely randomly.

Pair Corralation between QBE Insurance and Fomo Worldwide

Assuming the 90 days horizon QBE Insurance is expected to generate 315.89 times less return on investment than Fomo Worldwide. But when comparing it to its historical volatility, QBE Insurance Group is 65.59 times less risky than Fomo Worldwide. It trades about 0.04 of its potential returns per unit of risk. Fomo Worldwide is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.60  in Fomo Worldwide on October 5, 2024 and sell it today you would lose (0.59) from holding Fomo Worldwide or give up 98.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	60.12%
Values	Daily Returns

QBE Insurance Group  vs.  Fomo Worldwide

QBE Insurance Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, QBE Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fomo Worldwide

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fomo Worldwide are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fomo Worldwide unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QBE Insurance and Fomo Worldwide

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

The idea behind QBE Insurance Group and Fomo Worldwide 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.