Correlation Between Reinsurance Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Reinsurance Group and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Dow Jones.
Diversification Opportunities for Reinsurance Group and Dow Jones
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reinsurance and Dow is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Dow Jones go up and down completely randomly.
Pair Corralation between Reinsurance Group and Dow Jones
Considering the 90-day investment horizon Reinsurance Group of is expected to generate 2.01 times more return on investment than Dow Jones. However, Reinsurance Group is 2.01 times more volatile than Dow Jones Industrial. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 21,193 in Reinsurance Group of on August 28, 2024 and sell it today you would earn a total of 1,950 from holding Reinsurance Group of or generate 9.2% 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. Dow Jones Industrial
Performance |
| Timeline |
Reinsurance Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Reinsurance Group of
Pair trading matchups for Reinsurance Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Reinsurance Group and Dow Jones
The main advantage of trading using opposite Reinsurance Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Reinsurance Group vs. Maiden Holdings | Reinsurance Group vs. Greenlight Capital Re | Reinsurance Group vs. RenaissanceRe Holdings | Reinsurance Group vs. Renaissancere Holdings |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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