Correlation Between Reinsurance Group and VIRG NATL
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and VIRG NATL 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 VIRG NATL 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 VIRG NATL BANKSH, you can compare the effects of market volatilities on Reinsurance Group and VIRG NATL 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 VIRG NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and VIRG NATL.
Diversification Opportunities for Reinsurance Group and VIRG NATL
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reinsurance and VIRG is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and VIRG NATL BANKSH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIRG NATL BANKSH 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 VIRG NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIRG NATL BANKSH has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and VIRG NATL go up and down completely randomly.
Pair Corralation between Reinsurance Group and VIRG NATL
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 1.01 times more return on investment than VIRG NATL. However, Reinsurance Group is 1.01 times more volatile than VIRG NATL BANKSH. It trades about 0.16 of its potential returns per unit of risk. VIRG NATL BANKSH is currently generating about 0.14 per unit of risk. If you would invest 19,614 in Reinsurance Group of on September 1, 2024 and sell it today you would earn a total of 1,986 from holding Reinsurance Group of or generate 10.13% 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. VIRG NATL BANKSH
Performance |
| Timeline |
| Reinsurance Group |
| VIRG NATL BANKSH |
Reinsurance Group and VIRG NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and VIRG NATL
The main advantage of trading using opposite Reinsurance Group and VIRG NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, VIRG NATL 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 VIRG NATL will offset losses from the drop in VIRG NATL's long position.| Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. Origin Agritech | Reinsurance Group vs. Identiv | Reinsurance Group vs. INTUITIVE SURGICAL |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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