Correlation Between Reinsurance Group and Swiss Re
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and Swiss Re 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 Swiss Re 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 Swiss Re AG, you can compare the effects of market volatilities on Reinsurance Group and Swiss Re 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 Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Swiss Re.
Diversification Opportunities for Reinsurance Group and Swiss Re
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reinsurance and Swiss is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Swiss Re AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re AG 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 Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re AG has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Swiss Re go up and down completely randomly.
Pair Corralation between Reinsurance Group and Swiss Re
Considering the 90-day investment horizon Reinsurance Group is expected to generate 2.12 times less return on investment than Swiss Re. But when comparing it to its historical volatility, Reinsurance Group of is 3.08 times less risky than Swiss Re. It trades about 0.08 of its potential returns per unit of risk. Swiss Re AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,886 in Swiss Re AG on August 24, 2024 and sell it today you would earn a total of 6,364 from holding Swiss Re AG or generate 80.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 79.23% |
| Values | Daily Returns |
Reinsurance Group of vs. Swiss Re AG
Performance |
| Timeline |
| Reinsurance Group |
| Swiss Re AG |
Reinsurance Group and Swiss Re Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Swiss Re
The main advantage of trading using opposite Reinsurance Group and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, Swiss Re 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 Swiss Re will offset losses from the drop in Swiss Re's long position.| Reinsurance Group vs. Greenlight Capital Re | Reinsurance Group vs. RenaissanceRe Holdings | Reinsurance Group vs. Renaissancere Holdings | Reinsurance Group vs. Siriuspoint |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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