Correlation Between COFACE SA and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both COFACE SA and Reinsurance Group 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 COFACE SA and Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COFACE SA and Reinsurance Group of, you can compare the effects of market volatilities on COFACE SA and Reinsurance Group 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 COFACE SA with a short position of Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFACE SA and Reinsurance Group.
Diversification Opportunities for COFACE SA and Reinsurance Group
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between COFACE and Reinsurance is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding COFACE SA and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group and COFACE SA 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 COFACE SA are associated (or correlated) with Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of COFACE SA i.e., COFACE SA and Reinsurance Group go up and down completely randomly.
Pair Corralation between COFACE SA and Reinsurance Group
Assuming the 90 days horizon COFACE SA is expected to generate 0.7 times more return on investment than Reinsurance Group. However, COFACE SA is 1.43 times less risky than Reinsurance Group. It trades about 0.02 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.02 per unit of risk. If you would invest 1,329 in COFACE SA on September 23, 2024 and sell it today you would earn a total of 45.00 from holding COFACE SA or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COFACE SA vs. Reinsurance Group of
Performance |
| Timeline |
| COFACE SA |
| Reinsurance Group |
COFACE SA and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COFACE SA and Reinsurance Group
The main advantage of trading using opposite COFACE SA and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COFACE SA position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| COFACE SA vs. MUENCHRUECKUNSADR 110 | COFACE SA vs. Swiss Re AG | COFACE SA vs. HANNRUECKVSE ADR 12ON | COFACE SA vs. Everest Group |
| Reinsurance Group vs. MUENCHRUECKUNSADR 110 | Reinsurance Group vs. Swiss Re AG | Reinsurance Group vs. HANNRUECKVSE ADR 12ON | Reinsurance Group vs. Everest 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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