Correlation Between Reinsurance Group and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on Reinsurance Group and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Quaker Chemical.
Diversification Opportunities for Reinsurance Group and Quaker Chemical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reinsurance and Quaker is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Quaker Chemical go up and down completely randomly.
Pair Corralation between Reinsurance Group and Quaker Chemical
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 0.9 times more return on investment than Quaker Chemical. However, Reinsurance Group of is 1.11 times less risky than Quaker Chemical. It trades about -0.31 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.29 per unit of risk. If you would invest 21,200 in Reinsurance Group of on September 21, 2024 and sell it today you would lose (2,000) from holding Reinsurance Group of or give up 9.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. Quaker Chemical
Performance |
| Timeline |
| Reinsurance Group |
| Quaker Chemical |
Reinsurance Group and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Quaker Chemical
The main advantage of trading using opposite Reinsurance Group and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Reinsurance Group vs. Tradegate AG Wertpapierhandelsbank | Reinsurance Group vs. TRADEGATE | Reinsurance Group vs. SUN ART RETAIL | Reinsurance Group vs. FAST RETAIL ADR |
| Quaker Chemical vs. The Hanover Insurance | Quaker Chemical vs. Reinsurance Group of | Quaker Chemical vs. Safety Insurance Group | Quaker Chemical vs. QBE Insurance Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |