Correlation Between RenaissanceRe Holdings and Voya Financial
Can any of the company-specific risk be diversified away by investing in both RenaissanceRe Holdings and Voya Financial 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 Voya Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RenaissanceRe Holdings and Voya Financial, you can compare the effects of market volatilities on RenaissanceRe Holdings and Voya Financial 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 Voya Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of RenaissanceRe Holdings and Voya Financial.
Diversification Opportunities for RenaissanceRe Holdings and Voya Financial
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RenaissanceRe and Voya is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial 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 Voya Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Financial has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Voya Financial go up and down completely randomly.
Pair Corralation between RenaissanceRe Holdings and Voya Financial
Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 3.74 times less return on investment than Voya Financial. But when comparing it to its historical volatility, RenaissanceRe Holdings is 5.86 times less risky than Voya Financial. It trades about 0.17 of its potential returns per unit of risk. Voya Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,857 in Voya Financial on September 3, 2024 and sell it today you would earn a total of 443.00 from holding Voya Financial or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RenaissanceRe Holdings vs. Voya Financial
Performance |
| Timeline |
| RenaissanceRe Holdings |
| Voya Financial |
RenaissanceRe Holdings and Voya Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RenaissanceRe Holdings and Voya Financial
The main advantage of trading using opposite RenaissanceRe Holdings and Voya Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RenaissanceRe Holdings position performs unexpectedly, Voya Financial 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 Voya Financial will offset losses from the drop in Voya Financial's long position.| RenaissanceRe Holdings vs. SiriusPoint | RenaissanceRe Holdings vs. Greenlight Capital Re | RenaissanceRe Holdings vs. Maiden Holdings | RenaissanceRe Holdings vs. Renaissancere Holdings |
| Voya Financial vs. Lendingtree | Voya Financial vs. Voya Financial | Voya Financial vs. B Riley Financial | Voya Financial 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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