Correlation Between Hannover and Siriuspoint
Can any of the company-specific risk be diversified away by investing in both Hannover and Siriuspoint 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 and Siriuspoint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannover Re and Siriuspoint, you can compare the effects of market volatilities on Hannover and Siriuspoint 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 with a short position of Siriuspoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannover and Siriuspoint.
Diversification Opportunities for Hannover and Siriuspoint
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hannover and Siriuspoint is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hannover Re and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint and Hannover 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 Re are associated (or correlated) with Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Hannover i.e., Hannover and Siriuspoint go up and down completely randomly.
Pair Corralation between Hannover and Siriuspoint
Assuming the 90 days horizon Hannover is expected to generate 2.26 times less return on investment than Siriuspoint. But when comparing it to its historical volatility, Hannover Re is 1.39 times less risky than Siriuspoint. It trades about 0.07 of its potential returns per unit of risk. Siriuspoint is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 608.00 in Siriuspoint on September 3, 2024 and sell it today you would earn a total of 934.00 from holding Siriuspoint or generate 153.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannover Re vs. Siriuspoint
Performance |
| Timeline |
| Hannover Re |
| Siriuspoint |
Hannover and Siriuspoint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannover and Siriuspoint
The main advantage of trading using opposite Hannover and Siriuspoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannover position performs unexpectedly, Siriuspoint 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 Siriuspoint will offset losses from the drop in Siriuspoint's long position.The idea behind Hannover Re and Siriuspoint 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.| Siriuspoint vs. Maiden Holdings | Siriuspoint vs. Reinsurance Group of | Siriuspoint vs. Oxbridge Re Holdings | Siriuspoint vs. Greenlight Capital Re |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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