Correlation Between QBE Insurance and Allstate
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Allstate 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 Allstate 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 The Allstate, you can compare the effects of market volatilities on QBE Insurance and Allstate 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 Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Allstate.
Diversification Opportunities for QBE Insurance and Allstate
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between QBE and Allstate is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of QBE Insurance i.e., QBE Insurance and Allstate go up and down completely randomly.
Pair Corralation between QBE Insurance and Allstate
Assuming the 90 days horizon QBE Insurance Group is expected to generate 0.84 times more return on investment than Allstate. However, QBE Insurance Group is 1.18 times less risky than Allstate. It trades about 0.29 of its potential returns per unit of risk. The Allstate is currently generating about 0.14 per unit of risk. If you would invest 965.00 in QBE Insurance Group on September 5, 2024 and sell it today you would earn a total of 265.00 from holding QBE Insurance Group or generate 27.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.46% |
Values | Daily Returns |
QBE Insurance Group vs. The Allstate
Performance |
Timeline |
QBE Insurance Group |
Allstate |
QBE Insurance and Allstate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with QBE Insurance and Allstate
The main advantage of trading using opposite QBE Insurance and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.QBE Insurance vs. The Allstate | QBE Insurance vs. Fairfax Financial Holdings | QBE Insurance vs. Insurance Australia Group |
Allstate vs. Fairfax Financial Holdings | Allstate vs. QBE Insurance Group | Allstate vs. Insurance Australia Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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