Correlation Between INSURANCE AUST and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST 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 INSURANCE AUST and Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and Reinsurance Group of, you can compare the effects of market volatilities on INSURANCE AUST 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 INSURANCE AUST with a short position of Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Reinsurance Group.
Diversification Opportunities for INSURANCE AUST and Reinsurance Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INSURANCE and Reinsurance is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group and INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Reinsurance Group go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Reinsurance Group
Assuming the 90 days trading horizon INSURANCE AUST is expected to generate 1.07 times less return on investment than Reinsurance Group. But when comparing it to its historical volatility, INSURANCE AUST GRP is 1.88 times less risky than Reinsurance Group. It trades about 0.32 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 19,415 in Reinsurance Group of on August 28, 2024 and sell it today you would earn a total of 2,185 from holding Reinsurance Group of or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Reinsurance Group of
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Reinsurance Group |
INSURANCE AUST and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Reinsurance Group
The main advantage of trading using opposite INSURANCE AUST and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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.| INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Microsoft |
| Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. NMI Holdings | Reinsurance Group vs. Origin Agritech | Reinsurance Group vs. SIVERS SEMICONDUCTORS AB |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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