Correlation Between Renaissancere Holdings and Mnchener Rckversicherungs
Can any of the company-specific risk be diversified away by investing in both Renaissancere Holdings and Mnchener Rckversicherungs 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 Mnchener Rckversicherungs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renaissancere Holdings and Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft, you can compare the effects of market volatilities on Renaissancere Holdings and Mnchener Rckversicherungs 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 Mnchener Rckversicherungs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renaissancere Holdings and Mnchener Rckversicherungs.
Diversification Opportunities for Renaissancere Holdings and Mnchener Rckversicherungs
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Renaissancere and Mnchener is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Renaissancere Holdings and Mnchener Rckversicherungs Gese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mnchener Rckversicherungs 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 Mnchener Rckversicherungs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mnchener Rckversicherungs has no effect on the direction of Renaissancere Holdings i.e., Renaissancere Holdings and Mnchener Rckversicherungs go up and down completely randomly.
Pair Corralation between Renaissancere Holdings and Mnchener Rckversicherungs
Considering the 90-day investment horizon Renaissancere Holdings is expected to generate 1.84 times less return on investment than Mnchener Rckversicherungs. In addition to that, Renaissancere Holdings is 1.19 times more volatile than Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft. It trades about 0.08 of its total potential returns per unit of risk. Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft is currently generating about 0.17 per unit of volatility. If you would invest 50,675 in Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft on September 12, 2024 and sell it today you would earn a total of 2,123 from holding Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Renaissancere Holdings vs. Mnchener Rckversicherungs Gese
Performance |
| Timeline |
| Renaissancere Holdings |
| Mnchener Rckversicherungs |
Renaissancere Holdings and Mnchener Rckversicherungs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renaissancere Holdings and Mnchener Rckversicherungs
The main advantage of trading using opposite Renaissancere Holdings and Mnchener Rckversicherungs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renaissancere Holdings position performs unexpectedly, Mnchener Rckversicherungs 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 Mnchener Rckversicherungs will offset losses from the drop in Mnchener Rckversicherungs' long position.| Renaissancere Holdings vs. Reinsurance Group of | Renaissancere Holdings vs. Greenlight Capital Re | Renaissancere Holdings vs. Siriuspoint | Renaissancere Holdings vs. SCOR PK |
| Mnchener Rckversicherungs vs. Maiden Holdings | Mnchener Rckversicherungs vs. Renaissancere Holdings | Mnchener Rckversicherungs vs. Greenlight Capital Re | Mnchener Rckversicherungs vs. Reinsurance Group of |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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