Correlation Between Reinsurance Group and Compagnie
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and Compagnie 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 Compagnie 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 Compagnie de Saint Gobain, you can compare the effects of market volatilities on Reinsurance Group and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Compagnie.
Diversification Opportunities for Reinsurance Group and Compagnie
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reinsurance and Compagnie is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Compagnie go up and down completely randomly.
Pair Corralation between Reinsurance Group and Compagnie
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 1.2 times more return on investment than Compagnie. However, Reinsurance Group is 1.2 times more volatile than Compagnie de Saint Gobain. It trades about 0.21 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about -0.28 per unit of risk. If you would invest 20,200 in Reinsurance Group of on October 16, 2024 and sell it today you would earn a total of 1,200 from holding Reinsurance Group of or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. Compagnie de Saint Gobain
Performance |
| Timeline |
| Reinsurance Group |
| Compagnie de Saint |
Reinsurance Group and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Compagnie
The main advantage of trading using opposite Reinsurance Group and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Reinsurance Group vs. BG Foods | Reinsurance Group vs. Astral Foods Limited | Reinsurance Group vs. MTY Food Group | Reinsurance Group vs. Sumitomo Rubber Industries |
| Compagnie vs. Cleanaway Waste Management | Compagnie vs. INSURANCE AUST GRP | Compagnie vs. Q2M Managementberatung AG | Compagnie vs. Reinsurance Group of |
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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