Correlation Between National Reinsurance and COL Financial
Can any of the company-specific risk be diversified away by investing in both National Reinsurance and COL Financial 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 National Reinsurance and COL Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Reinsurance and COL Financial Group, you can compare the effects of market volatilities on National Reinsurance and COL Financial 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 National Reinsurance with a short position of COL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Reinsurance and COL Financial.
Diversification Opportunities for National Reinsurance and COL Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and COL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial Group and National Reinsurance 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 National Reinsurance are associated (or correlated) with COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of National Reinsurance i.e., National Reinsurance and COL Financial go up and down completely randomly.
Pair Corralation between National Reinsurance and COL Financial
Assuming the 90 days trading horizon National Reinsurance is expected to generate 3.64 times more return on investment than COL Financial. However, National Reinsurance is 3.64 times more volatile than COL Financial Group. It trades about 0.04 of its potential returns per unit of risk. COL Financial Group is currently generating about -0.04 per unit of risk. If you would invest 62.00 in National Reinsurance on September 12, 2024 and sell it today you would earn a total of 6.00 from holding National Reinsurance or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.71% |
| Values | Daily Returns |
National Reinsurance vs. COL Financial Group
Performance |
| Timeline |
| National Reinsurance |
| COL Financial Group |
National Reinsurance and COL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Reinsurance and COL Financial
The main advantage of trading using opposite National Reinsurance and COL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Reinsurance position performs unexpectedly, COL Financial 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 COL Financial will offset losses from the drop in COL Financial's long position.| National Reinsurance vs. Manulife Financial Corp | National Reinsurance vs. Sun Life Financial | National Reinsurance vs. GT Capital Holdings | National Reinsurance vs. Allhome Corp |
| COL Financial vs. Semirara Mining Corp | COL Financial vs. Robinsons Retail Holdings | COL Financial vs. National Reinsurance | COL Financial vs. Lepanto Consolidated Mining |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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