Correlation Between RenaissanceRe Holdings and Lendingtree
Can any of the company-specific risk be diversified away by investing in both RenaissanceRe Holdings and Lendingtree 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 RenaissanceRe Holdings and Lendingtree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RenaissanceRe Holdings and Lendingtree, you can compare the effects of market volatilities on RenaissanceRe Holdings and Lendingtree 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 RenaissanceRe Holdings with a short position of Lendingtree. Check out your portfolio center. Please also check ongoing floating volatility patterns of RenaissanceRe Holdings and Lendingtree.
Diversification Opportunities for RenaissanceRe Holdings and Lendingtree
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RenaissanceRe and Lendingtree is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and Lendingtree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendingtree and RenaissanceRe Holdings 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 RenaissanceRe Holdings are associated (or correlated) with Lendingtree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendingtree has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Lendingtree go up and down completely randomly.
Pair Corralation between RenaissanceRe Holdings and Lendingtree
Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 0.12 times more return on investment than Lendingtree. However, RenaissanceRe Holdings is 8.47 times less risky than Lendingtree. It trades about 0.17 of its potential returns per unit of risk. Lendingtree is currently generating about -0.03 per unit of risk. If you would invest 2,403 in RenaissanceRe Holdings on September 3, 2024 and sell it today you would earn a total of 40.00 from holding RenaissanceRe Holdings or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RenaissanceRe Holdings vs. Lendingtree
Performance |
| Timeline |
| RenaissanceRe Holdings |
| Lendingtree |
RenaissanceRe Holdings and Lendingtree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RenaissanceRe Holdings and Lendingtree
The main advantage of trading using opposite RenaissanceRe Holdings and Lendingtree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RenaissanceRe Holdings position performs unexpectedly, Lendingtree 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 Lendingtree will offset losses from the drop in Lendingtree's long position.| RenaissanceRe Holdings vs. SiriusPoint | RenaissanceRe Holdings vs. Greenlight Capital Re | RenaissanceRe Holdings vs. Maiden Holdings | RenaissanceRe Holdings vs. Renaissancere Holdings |
| Lendingtree vs. Voya Financial | Lendingtree vs. B Riley Financial | Lendingtree vs. Voya Financial | Lendingtree vs. B Riley Financial |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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