Correlation Between QBE Insurance and First Citizens

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

Diversification Opportunities for QBE Insurance and First Citizens

0.0

Correlation Coefficient

QBE Insurance  First Citizens

Pay attention - limited upside

The 3 months correlation between QBE and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and The First Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens 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 First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens has no effect on the direction of QBE Insurance i.e., QBE Insurance and First Citizens go up and down completely randomly.

Pair Corralation between QBE Insurance and First Citizens

Assuming the 90 days horizon QBE Insurance Group is expected to generate 2.66 times more return on investment than First Citizens. However, QBE Insurance is 2.66 times more volatile than The First Citizens. It trades about 0.04 of its potential returns per unit of risk. The First Citizens is currently generating about -0.02 per unit of risk. If you would invest  846.00  in QBE Insurance Group on September 4, 2024 and sell it today you would earn a total of  319.00  from holding QBE Insurance Group or generate 37.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	59.95%
Values	Daily Returns

QBE Insurance Group  vs.  The First Citizens

QBE Insurance Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 6 (%) 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 January 2025.

First Citizens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The First Citizens has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, First Citizens is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with QBE Insurance and First Citizens

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

The idea behind QBE Insurance Group and The First Citizens 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.