Correlation Between Deutsche Bank and Renaissancere Holdings
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Renaissancere Holdings 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 Deutsche Bank and Renaissancere Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Bank AG and Renaissancere Holdings, you can compare the effects of market volatilities on Deutsche Bank and Renaissancere Holdings 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 Deutsche Bank with a short position of Renaissancere Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Renaissancere Holdings.
Diversification Opportunities for Deutsche Bank and Renaissancere Holdings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Renaissancere is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Renaissancere Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renaissancere Holdings and Deutsche Bank 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 Deutsche Bank AG are associated (or correlated) with Renaissancere Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renaissancere Holdings has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Renaissancere Holdings go up and down completely randomly.
Pair Corralation between Deutsche Bank and Renaissancere Holdings
Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to under-perform the Renaissancere Holdings. In addition to that, Deutsche Bank is 1.05 times more volatile than Renaissancere Holdings. It trades about -0.09 of its total potential returns per unit of risk. Renaissancere Holdings is currently generating about 0.11 per unit of volatility. If you would invest 26,928 in Renaissancere Holdings on August 28, 2024 and sell it today you would earn a total of 1,039 from holding Renaissancere Holdings or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank AG vs. Renaissancere Holdings
Performance |
| Timeline |
| Deutsche Bank AG |
| Renaissancere Holdings |
Deutsche Bank and Renaissancere Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Renaissancere Holdings
The main advantage of trading using opposite Deutsche Bank and Renaissancere Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Renaissancere Holdings 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 Renaissancere Holdings will offset losses from the drop in Renaissancere Holdings' long position.| Deutsche Bank vs. Banco Bradesco SA | Deutsche Bank vs. Itau Unibanco Banco | Deutsche Bank vs. Lloyds Banking Group | Deutsche Bank vs. Banco Santander Brasil |
| Renaissancere Holdings vs. Reinsurance Group of | Renaissancere Holdings vs. Greenlight Capital Re | Renaissancere Holdings vs. Siriuspoint | Renaissancere Holdings vs. SCOR PK |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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