Correlation Between CATCo Reinsurance and Fair Oaks
Can any of the company-specific risk be diversified away by investing in both CATCo Reinsurance and Fair Oaks 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 Fair Oaks 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 Fair Oaks Income, you can compare the effects of market volatilities on CATCo Reinsurance and Fair Oaks 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 Fair Oaks. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATCo Reinsurance and Fair Oaks.
Diversification Opportunities for CATCo Reinsurance and Fair Oaks
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CATCo and Fair is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CATCo Reinsurance Opportunitie and Fair Oaks Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Oaks Income 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 Fair Oaks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Oaks Income has no effect on the direction of CATCo Reinsurance i.e., CATCo Reinsurance and Fair Oaks go up and down completely randomly.
Pair Corralation between CATCo Reinsurance and Fair Oaks
Assuming the 90 days trading horizon CATCo Reinsurance Opportunities is expected to generate 8.31 times more return on investment than Fair Oaks. However, CATCo Reinsurance is 8.31 times more volatile than Fair Oaks Income. It trades about 0.22 of its potential returns per unit of risk. Fair Oaks Income is currently generating about 0.14 per unit of risk. If you would invest 2,500 in CATCo Reinsurance Opportunities on August 28, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATCo Reinsurance Opportunitie vs. Fair Oaks Income
Performance |
| Timeline |
| CATCo Reinsurance |
| Fair Oaks Income |
CATCo Reinsurance and Fair Oaks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATCo Reinsurance and Fair Oaks
The main advantage of trading using opposite CATCo Reinsurance and Fair Oaks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATCo Reinsurance position performs unexpectedly, Fair Oaks 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 Fair Oaks will offset losses from the drop in Fair Oaks' long position.| CATCo Reinsurance vs. Samsung Electronics Co | CATCo Reinsurance vs. Samsung Electronics Co | CATCo Reinsurance vs. Hyundai Motor | CATCo Reinsurance vs. Toyota Motor Corp |
| Fair Oaks vs. Deltex Medical Group | Fair Oaks vs. Celebrus Technologies plc | Fair Oaks vs. Thor Mining PLC | Fair Oaks vs. GoldMining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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