Correlation Between DAX Index and RenaissanceRe Holdings

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both DAX Index 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 DAX Index and RenaissanceRe Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAX Index and RenaissanceRe Holdings, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of RenaissanceRe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and RenaissanceRe Holdings.

Diversification Opportunities for DAX Index and RenaissanceRe Holdings

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between DAX and RenaissanceRe is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and RenaissanceRe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenaissanceRe Holdings and DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and RenaissanceRe Holdings go up and down completely randomly.
    Optimize

Pair Corralation between DAX Index and RenaissanceRe Holdings

Assuming the 90 days trading horizon DAX Index is expected to generate 1.88 times less return on investment than RenaissanceRe Holdings. But when comparing it to its historical volatility, DAX Index is 2.17 times less risky than RenaissanceRe Holdings. It trades about 0.07 of its potential returns per unit of risk. RenaissanceRe Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  20,295  in RenaissanceRe Holdings on September 24, 2024 and sell it today you would earn a total of  3,505  from holding RenaissanceRe Holdings or generate 17.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

DAX Index  vs.  RenaissanceRe Holdings

 Performance 
       Timeline  

DAX Index and RenaissanceRe Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DAX Index and RenaissanceRe Holdings

The main advantage of trading using opposite DAX Index and RenaissanceRe Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.
DAX Index vs. Seven West Media
DAX Index vs. TERADATA
DAX Index vs. DICKER DATA LTD
DAX Index vs. Datang International Power
The idea behind DAX Index and RenaissanceRe Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
RenaissanceRe Holdings vs. MUENCHRUECKUNSADR 110
RenaissanceRe Holdings vs. Swiss Re AG
RenaissanceRe Holdings vs. HANNRUECKVSE ADR 12ON
RenaissanceRe Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

Other Complementary Tools

Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges


 
Macroaxis helps investors of all levels and skills to maximize the upside of all their holdings and minimize the risk associated with market volatility, economic swings, and company-specific events. View terms and conditions
 
Feedback Blog
Made with optimal in San Francisco
2024 Macroaxis LLC
COMMON DESTINATIONS
MAIN CATEGORIES
COMPANY