Correlation Between Reinsurance Group and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and Sandfire Resources 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 Sandfire Resources 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 Sandfire Resources Limited, you can compare the effects of market volatilities on Reinsurance Group and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Sandfire Resources.
Diversification Opportunities for Reinsurance Group and Sandfire Resources
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Reinsurance and Sandfire is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Sandfire Resources go up and down completely randomly.
Pair Corralation between Reinsurance Group and Sandfire Resources
Assuming the 90 days trading horizon Reinsurance Group is expected to generate 1.44 times less return on investment than Sandfire Resources. But when comparing it to its historical volatility, Reinsurance Group of is 1.46 times less risky than Sandfire Resources. It trades about 0.17 of its potential returns per unit of risk. Sandfire Resources Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 560.00 in Sandfire Resources Limited on November 4, 2024 and sell it today you would earn a total of 40.00 from holding Sandfire Resources Limited or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Reinsurance Group of vs. Sandfire Resources Limited
Performance |
| Timeline |
| Reinsurance Group |
| Sandfire Resources |
Reinsurance Group and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Sandfire Resources
The main advantage of trading using opposite Reinsurance Group and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Reinsurance Group vs. Scandinavian Tobacco Group | Reinsurance Group vs. Ultra Clean Holdings | Reinsurance Group vs. CeoTronics AG | Reinsurance Group vs. CEOTRONICS |
| Sandfire Resources vs. JSC Halyk bank | Sandfire Resources vs. Virtu Financial | Sandfire Resources vs. Commonwealth Bank of | Sandfire Resources vs. BANKINTER ADR 2007 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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