Correlation Between Sandfire Resources and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Reinsurance Group 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 Sandfire Resources and Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandfire Resources Limited and Reinsurance Group of, you can compare the effects of market volatilities on Sandfire Resources and Reinsurance Group 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 Sandfire Resources with a short position of Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Reinsurance Group.
Diversification Opportunities for Sandfire Resources and Reinsurance Group
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sandfire and Reinsurance is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources Limited and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group and Sandfire Resources 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 Sandfire Resources Limited are associated (or correlated) with Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Reinsurance Group go up and down completely randomly.
Pair Corralation between Sandfire Resources and Reinsurance Group
Assuming the 90 days horizon Sandfire Resources Limited is expected to generate 1.46 times more return on investment than Reinsurance Group. However, Sandfire Resources is 1.46 times more volatile than Reinsurance Group of. It trades about 0.17 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.17 per unit of risk. If you would invest 560.00 in Sandfire Resources Limited on November 4, 2024 and sell it today you would earn a total of 40.00 from holding Sandfire Resources Limited or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sandfire Resources Limited vs. Reinsurance Group of
Performance |
| Timeline |
| Sandfire Resources |
| Reinsurance Group |
Sandfire Resources and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Reinsurance Group
The main advantage of trading using opposite Sandfire Resources and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| Sandfire Resources vs. JSC Halyk bank | Sandfire Resources vs. Virtu Financial | Sandfire Resources vs. Commonwealth Bank of | Sandfire Resources vs. BANKINTER ADR 2007 |
| Reinsurance Group vs. Scandinavian Tobacco Group | Reinsurance Group vs. Ultra Clean Holdings | Reinsurance Group vs. CeoTronics AG | Reinsurance Group vs. CEOTRONICS |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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