Correlation Between CATCo Reinsurance and BH Macro
Can any of the company-specific risk be diversified away by investing in both CATCo Reinsurance and BH Macro 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 CATCo Reinsurance and BH Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATCo Reinsurance Opportunities and BH Macro Limited, you can compare the effects of market volatilities on CATCo Reinsurance and BH Macro 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 CATCo Reinsurance with a short position of BH Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATCo Reinsurance and BH Macro.
Diversification Opportunities for CATCo Reinsurance and BH Macro
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CATCo and BHMU is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CATCo Reinsurance Opportunitie and BH Macro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Macro Limited and CATCo Reinsurance 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 CATCo Reinsurance Opportunities are associated (or correlated) with BH Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Macro Limited has no effect on the direction of CATCo Reinsurance i.e., CATCo Reinsurance and BH Macro go up and down completely randomly.
Pair Corralation between CATCo Reinsurance and BH Macro
Assuming the 90 days trading horizon CATCo Reinsurance Opportunities is expected to generate 7.67 times more return on investment than BH Macro. However, CATCo Reinsurance is 7.67 times more volatile than BH Macro Limited. It trades about 0.21 of its potential returns per unit of risk. BH Macro Limited is currently generating about 0.22 per unit of risk. If you would invest 2,500 in CATCo Reinsurance Opportunities on August 29, 2024 and sell it today you would earn a total of 1,250 from holding CATCo Reinsurance Opportunities or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATCo Reinsurance Opportunitie vs. BH Macro Limited
Performance |
| Timeline |
| CATCo Reinsurance |
| BH Macro Limited |
CATCo Reinsurance and BH Macro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATCo Reinsurance and BH Macro
The main advantage of trading using opposite CATCo Reinsurance and BH Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATCo Reinsurance position performs unexpectedly, BH Macro 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 BH Macro will offset losses from the drop in BH Macro's long position.| CATCo Reinsurance vs. Toyota Motor Corp | CATCo Reinsurance vs. Lendinvest PLC | CATCo Reinsurance vs. Neometals | CATCo Reinsurance vs. Coor Service Management |
| BH Macro vs. Toyota Motor Corp | BH Macro vs. Lendinvest PLC | BH Macro vs. Neometals | BH Macro vs. Coor Service Management |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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