Correlation Between Hannover Rck and Swiss Re
Can any of the company-specific risk be diversified away by investing in both Hannover Rck and Swiss Re 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 Hannover Rck and Swiss Re into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannover Rck SE and Swiss Re, you can compare the effects of market volatilities on Hannover Rck and Swiss Re 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 Hannover Rck with a short position of Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannover Rck and Swiss Re.
Diversification Opportunities for Hannover Rck and Swiss Re
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hannover and Swiss is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hannover Rck SE and Swiss Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re and Hannover Rck 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 Hannover Rck SE are associated (or correlated) with Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re has no effect on the direction of Hannover Rck i.e., Hannover Rck and Swiss Re go up and down completely randomly.
Pair Corralation between Hannover Rck and Swiss Re
Assuming the 90 days horizon Hannover Rck SE is expected to generate 1.54 times more return on investment than Swiss Re. However, Hannover Rck is 1.54 times more volatile than Swiss Re. It trades about 0.07 of its potential returns per unit of risk. Swiss Re is currently generating about 0.08 per unit of risk. If you would invest 14,575 in Hannover Rck SE on September 19, 2024 and sell it today you would earn a total of 11,730 from holding Hannover Rck SE or generate 80.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Hannover Rck SE vs. Swiss Re
Performance |
| Timeline |
| Hannover Rck SE |
| Swiss Re |
Hannover Rck and Swiss Re Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannover Rck and Swiss Re
The main advantage of trading using opposite Hannover Rck and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannover Rck position performs unexpectedly, Swiss Re 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 Swiss Re will offset losses from the drop in Swiss Re's long position.| Hannover Rck vs. Swiss Re | Hannover Rck vs. Hannover Re | Hannover Rck vs. SCOR PK | Hannover Rck vs. SiriusPoint |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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