Correlation Between SiriusPoint and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both SiriusPoint 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 SiriusPoint and Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SiriusPoint and Reinsurance Group of, you can compare the effects of market volatilities on SiriusPoint 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 SiriusPoint with a short position of Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SiriusPoint and Reinsurance Group.
Diversification Opportunities for SiriusPoint and Reinsurance Group
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SiriusPoint and Reinsurance is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SiriusPoint and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group and SiriusPoint 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 SiriusPoint 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 SiriusPoint i.e., SiriusPoint and Reinsurance Group go up and down completely randomly.
Pair Corralation between SiriusPoint and Reinsurance Group
Assuming the 90 days trading horizon SiriusPoint is expected to generate 5.48 times less return on investment than Reinsurance Group. But when comparing it to its historical volatility, SiriusPoint is 5.06 times less risky than Reinsurance Group. It trades about 0.1 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 16,023 in Reinsurance Group of on August 26, 2024 and sell it today you would earn a total of 7,047 from holding Reinsurance Group of or generate 43.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SiriusPoint vs. Reinsurance Group of
Performance |
| Timeline |
| SiriusPoint |
| Reinsurance Group |
SiriusPoint and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SiriusPoint and Reinsurance Group
The main advantage of trading using opposite SiriusPoint and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SiriusPoint 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.| SiriusPoint vs. RLJ Lodging Trust | SiriusPoint vs. Argo Group International | SiriusPoint vs. New York Mortgage | SiriusPoint vs. Aquagold International |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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