Correlation Between RenaissanceRe Holdings and Dow Jones
Can any of the company-specific risk be diversified away by investing in both RenaissanceRe Holdings and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RenaissanceRe Holdings and Dow Jones Industrial, you can compare the effects of market volatilities on RenaissanceRe Holdings and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of RenaissanceRe Holdings and Dow Jones.
Diversification Opportunities for RenaissanceRe Holdings and Dow Jones
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RenaissanceRe and Dow is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Dow Jones go up and down completely randomly.
Pair Corralation between RenaissanceRe Holdings and Dow Jones
Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to under-perform the Dow Jones. But the preferred stock apears to be less risky and, when comparing its historical volatility, RenaissanceRe Holdings is 1.37 times less risky than Dow Jones. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RenaissanceRe Holdings vs. Dow Jones Industrial
Performance |
| Timeline |
RenaissanceRe Holdings and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
RenaissanceRe Holdings
Pair trading matchups for RenaissanceRe Holdings
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with RenaissanceRe Holdings and Dow Jones
The main advantage of trading using opposite RenaissanceRe Holdings and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RenaissanceRe Holdings position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| RenaissanceRe Holdings vs. RenaissanceRe Holdings | RenaissanceRe Holdings vs. Athene Holding | RenaissanceRe Holdings vs. AXIS Capital Holdings | RenaissanceRe Holdings vs. Truist Financial |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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