Correlation Between COFACE SA and Swiss Re
Can any of the company-specific risk be diversified away by investing in both COFACE SA and Swiss Re 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 Swiss Re into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COFACE SA and Swiss Re AG, you can compare the effects of market volatilities on COFACE SA and Swiss Re 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 Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFACE SA and Swiss Re.
Diversification Opportunities for COFACE SA and Swiss Re
Poor diversification
The 3 months correlation between COFACE and Swiss is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding COFACE SA and Swiss Re AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re AG 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 Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re AG has no effect on the direction of COFACE SA i.e., COFACE SA and Swiss Re go up and down completely randomly.
Pair Corralation between COFACE SA and Swiss Re
Assuming the 90 days horizon COFACE SA is expected to generate 0.58 times more return on investment than Swiss Re. However, COFACE SA is 1.73 times less risky than Swiss Re. It trades about 0.09 of its potential returns per unit of risk. Swiss Re AG is currently generating about 0.03 per unit of risk. If you would invest 1,589 in COFACE SA on December 13, 2024 and sell it today you would earn a total of 43.00 from holding COFACE SA or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COFACE SA vs. Swiss Re AG
Performance |
| Timeline |
| COFACE SA |
| Swiss Re AG |
COFACE SA and Swiss Re Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COFACE SA and Swiss Re
The main advantage of trading using opposite COFACE SA and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COFACE SA position performs unexpectedly, Swiss Re 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 Swiss Re will offset losses from the drop in Swiss Re'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 |
| Swiss Re vs. LINMON MEDIA LTD | Swiss Re vs. G5 Entertainment AB | Swiss Re vs. Ubisoft Entertainment SA | Swiss Re vs. PROSIEBENSAT1 MEDIADR4 |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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