Correlation Between RenaissanceRe Holdings and Swiss Re
Can any of the company-specific risk be diversified away by investing in both RenaissanceRe Holdings and Swiss Re 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 Swiss Re into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RenaissanceRe Holdings and Swiss Re AG, you can compare the effects of market volatilities on RenaissanceRe Holdings and Swiss Re 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 Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of RenaissanceRe Holdings and Swiss Re.
Diversification Opportunities for RenaissanceRe Holdings and Swiss Re
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RenaissanceRe and Swiss is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and Swiss Re AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re AG 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 Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re AG has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Swiss Re go up and down completely randomly.
Pair Corralation between RenaissanceRe Holdings and Swiss Re
Assuming the 90 days horizon RenaissanceRe Holdings is expected to under-perform the Swiss Re. But the stock apears to be less risky and, when comparing its historical volatility, RenaissanceRe Holdings is 1.18 times less risky than Swiss Re. The stock trades about -0.07 of its potential returns per unit of risk. The Swiss Re AG is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,980 in Swiss Re AG on September 23, 2024 and sell it today you would earn a total of 440.00 from holding Swiss Re AG or generate 14.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RenaissanceRe Holdings vs. Swiss Re AG
Performance |
| Timeline |
| RenaissanceRe Holdings |
| Swiss Re AG |
RenaissanceRe Holdings and Swiss Re Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RenaissanceRe Holdings and Swiss Re
The main advantage of trading using opposite RenaissanceRe Holdings and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RenaissanceRe Holdings position performs unexpectedly, Swiss Re 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 Swiss Re will offset losses from the drop in Swiss Re's long position.| RenaissanceRe Holdings vs. MUENCHRUECKUNSADR 110 | RenaissanceRe Holdings vs. Swiss Re AG | RenaissanceRe Holdings vs. HANNRUECKVSE ADR 12ON | RenaissanceRe Holdings vs. Everest Group |
| Swiss Re vs. MUENCHRUECKUNSADR 110 | Swiss Re vs. HANNRUECKVSE ADR 12ON | Swiss Re vs. Everest Group | Swiss Re 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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