Correlation Between Houlihan Lokey and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both Houlihan Lokey and Reinsurance Group 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 Houlihan Lokey and Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Houlihan Lokey and Reinsurance Group of, you can compare the effects of market volatilities on Houlihan Lokey and Reinsurance Group 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 Houlihan Lokey with a short position of Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Houlihan Lokey and Reinsurance Group.
Diversification Opportunities for Houlihan Lokey and Reinsurance Group
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Houlihan and Reinsurance is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group and Houlihan Lokey 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 Houlihan Lokey are associated (or correlated) with Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Houlihan Lokey i.e., Houlihan Lokey and Reinsurance Group go up and down completely randomly.
Pair Corralation between Houlihan Lokey and Reinsurance Group
Considering the 90-day investment horizon Houlihan Lokey is expected to generate 1.32 times more return on investment than Reinsurance Group. However, Houlihan Lokey is 1.32 times more volatile than Reinsurance Group of. It trades about 0.24 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.17 per unit of risk. If you would invest 16,465 in Houlihan Lokey on August 31, 2024 and sell it today you would earn a total of 2,278 from holding Houlihan Lokey or generate 13.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Houlihan Lokey vs. Reinsurance Group of
Performance |
| Timeline |
| Houlihan Lokey |
| Reinsurance Group |
Houlihan Lokey and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Houlihan Lokey and Reinsurance Group
The main advantage of trading using opposite Houlihan Lokey and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Houlihan Lokey position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| Houlihan Lokey vs. Lazard | Houlihan Lokey vs. PJT Partners | Houlihan Lokey vs. Moelis Co | Houlihan Lokey vs. Piper Sandler Companies |
| Reinsurance Group vs. Maiden Holdings | Reinsurance Group vs. Greenlight Capital Re | Reinsurance Group vs. RenaissanceRe Holdings | Reinsurance Group vs. Renaissancere Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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