Correlation Between Reinsurance Group and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and INSURANCE AUST 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 INSURANCE AUST 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 INSURANCE AUST GRP, you can compare the effects of market volatilities on Reinsurance Group and INSURANCE AUST 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 INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and INSURANCE AUST.
Diversification Opportunities for Reinsurance Group and INSURANCE AUST
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Reinsurance and INSURANCE is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP 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 INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and INSURANCE AUST go up and down completely randomly.
Pair Corralation between Reinsurance Group and INSURANCE AUST
Assuming the 90 days trading horizon Reinsurance Group is expected to generate 1.11 times less return on investment than INSURANCE AUST. In addition to that, Reinsurance Group is 1.49 times more volatile than INSURANCE AUST GRP. It trades about 0.1 of its total potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.17 per unit of volatility. If you would invest 427.00 in INSURANCE AUST GRP on August 28, 2024 and sell it today you would earn a total of 73.00 from holding INSURANCE AUST GRP or generate 17.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. INSURANCE AUST GRP
Performance |
| Timeline |
| Reinsurance Group |
| INSURANCE AUST GRP |
Reinsurance Group and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and INSURANCE AUST
The main advantage of trading using opposite Reinsurance Group and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, INSURANCE AUST 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 INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. NMI Holdings | Reinsurance Group vs. Origin Agritech | Reinsurance Group vs. SIVERS SEMICONDUCTORS AB |
| INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Microsoft |
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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