Correlation Between Muenchener Rueckver and Daiwa House
Can any of the company-specific risk be diversified away by investing in both Muenchener Rueckver and Daiwa House 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 Muenchener Rueckver and Daiwa House into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Muenchener Rueckver Ges and Daiwa House Industry, you can compare the effects of market volatilities on Muenchener Rueckver and Daiwa House 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 Muenchener Rueckver with a short position of Daiwa House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muenchener Rueckver and Daiwa House.
Diversification Opportunities for Muenchener Rueckver and Daiwa House
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Muenchener and Daiwa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Muenchener Rueckver Ges and Daiwa House Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa House Industry and Muenchener Rueckver 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 Muenchener Rueckver Ges are associated (or correlated) with Daiwa House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa House Industry has no effect on the direction of Muenchener Rueckver i.e., Muenchener Rueckver and Daiwa House go up and down completely randomly.
Pair Corralation between Muenchener Rueckver and Daiwa House
Assuming the 90 days horizon Muenchener Rueckver Ges is expected to generate 0.97 times more return on investment than Daiwa House. However, Muenchener Rueckver Ges is 1.03 times less risky than Daiwa House. It trades about 0.09 of its potential returns per unit of risk. Daiwa House Industry is currently generating about 0.06 per unit of risk. If you would invest 611.00 in Muenchener Rueckver Ges on September 3, 2024 and sell it today you would earn a total of 431.00 from holding Muenchener Rueckver Ges or generate 70.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Muenchener Rueckver Ges vs. Daiwa House Industry
Performance |
| Timeline |
| Muenchener Rueckver Ges |
| Daiwa House Industry |
Muenchener Rueckver and Daiwa House Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Muenchener Rueckver and Daiwa House
The main advantage of trading using opposite Muenchener Rueckver and Daiwa House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Muenchener Rueckver position performs unexpectedly, Daiwa House 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 Daiwa House will offset losses from the drop in Daiwa House's long position.| Muenchener Rueckver vs. SiriusPoint | Muenchener Rueckver vs. Renaissancere Holdings | Muenchener Rueckver vs. Maiden Holdings | Muenchener Rueckver vs. Greenlight Capital Re |
| Daiwa House vs. Sino Land Co | Daiwa House vs. Sun Hung Kai | Daiwa House vs. Holiday Island Holdings | Daiwa House vs. China Overseas Land |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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