Correlation Between British Amer and Qbe Insurance

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

By analyzing existing cross correlation between Bailador Technology Invest and Qbe Insurance Group, you can compare the effects of market volatilities on British Amer and Qbe Insurance 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 British Amer with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Qbe Insurance.

Diversification Opportunities for British Amer and Qbe Insurance

0.58

Correlation Coefficient

British Amer  Qbe Insurance

Very weak diversification

The 3 months correlation between British and Qbe is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bailador Technology Invest and Qbe Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qbe Insurance Group and British Amer 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 Bailador Technology Invest are associated (or correlated) with Qbe Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qbe Insurance Group has no effect on the direction of British Amer i.e., British Amer and Qbe Insurance go up and down completely randomly.

Pair Corralation between British Amer and Qbe Insurance

Assuming the 90 days trading horizon British Amer is expected to generate 3.34 times less return on investment than Qbe Insurance. But when comparing it to its historical volatility, Bailador Technology Invest is 1.12 times less risky than Qbe Insurance. It trades about 0.09 of its potential returns per unit of risk. Qbe Insurance Group is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,579  in Qbe Insurance Group on August 30, 2024 and sell it today you would earn a total of  397.00  from holding Qbe Insurance Group or generate 25.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Bailador Technology Invest  vs.  Qbe Insurance Group

Bailador Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bailador Technology Invest are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, British Amer may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Qbe Insurance Group

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qbe Insurance Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Qbe Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with British Amer and Qbe Insurance

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

The idea behind Bailador Technology Invest and Qbe Insurance Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.