Correlation Between Reinsurance Group and ITOCHU
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and ITOCHU 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 ITOCHU 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 ITOCHU, you can compare the effects of market volatilities on Reinsurance Group and ITOCHU 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 ITOCHU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and ITOCHU.
Diversification Opportunities for Reinsurance Group and ITOCHU
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Reinsurance and ITOCHU is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU 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 ITOCHU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITOCHU has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and ITOCHU go up and down completely randomly.
Pair Corralation between Reinsurance Group and ITOCHU
Assuming the 90 days trading horizon Reinsurance Group is expected to generate 1.02 times less return on investment than ITOCHU. But when comparing it to its historical volatility, Reinsurance Group of is 1.07 times less risky than ITOCHU. It trades about 0.07 of its potential returns per unit of risk. ITOCHU is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,993 in ITOCHU on September 16, 2024 and sell it today you would earn a total of 1,807 from holding ITOCHU or generate 60.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. ITOCHU
Performance |
| Timeline |
| Reinsurance Group |
| ITOCHU |
Reinsurance Group and ITOCHU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and ITOCHU
The main advantage of trading using opposite Reinsurance Group and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, ITOCHU 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 ITOCHU will offset losses from the drop in ITOCHU's long position.| Reinsurance Group vs. MUENCHRUECKUNSADR 110 | Reinsurance Group vs. China Reinsurance | Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. SIVERS SEMICONDUCTORS AB |
| ITOCHU vs. AGF Management Limited | ITOCHU vs. HANOVER INSURANCE | ITOCHU vs. Brockhaus Capital Management | ITOCHU 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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