Correlation Between Reinsurance Group and Brookfield Wealth
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and Brookfield Wealth 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 Reinsurance Group and Brookfield Wealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and Brookfield Wealth Solutions, you can compare the effects of market volatilities on Reinsurance Group and Brookfield Wealth 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 Reinsurance Group with a short position of Brookfield Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Brookfield Wealth.
Diversification Opportunities for Reinsurance Group and Brookfield Wealth
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reinsurance and Brookfield is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Brookfield Wealth Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Wealth and Reinsurance Group 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 Reinsurance Group of are associated (or correlated) with Brookfield Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Wealth has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Brookfield Wealth go up and down completely randomly.
Pair Corralation between Reinsurance Group and Brookfield Wealth
Considering the 90-day investment horizon Reinsurance Group of is expected to generate 1.22 times more return on investment than Brookfield Wealth. However, Reinsurance Group is 1.22 times more volatile than Brookfield Wealth Solutions. It trades about 0.19 of its potential returns per unit of risk. Brookfield Wealth Solutions is currently generating about 0.2 per unit of risk. If you would invest 21,183 in Reinsurance Group of on August 24, 2024 and sell it today you would earn a total of 1,734 from holding Reinsurance Group of or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. Brookfield Wealth Solutions
Performance |
| Timeline |
| Reinsurance Group |
| Brookfield Wealth |
Reinsurance Group and Brookfield Wealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Brookfield Wealth
The main advantage of trading using opposite Reinsurance Group and Brookfield Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, Brookfield Wealth 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 Brookfield Wealth will offset losses from the drop in Brookfield Wealth's long position.| Reinsurance Group vs. Maiden Holdings | Reinsurance Group vs. Greenlight Capital Re | Reinsurance Group vs. RenaissanceRe Holdings | Reinsurance Group vs. Renaissancere Holdings |
| Brookfield Wealth vs. Everest Group | Brookfield Wealth vs. Hamilton Insurance Group, | Brookfield Wealth vs. Reinsurance Group of | Brookfield Wealth vs. Renaissancere Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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