Correlation Between Swiss Re and COFACE SA
Can any of the company-specific risk be diversified away by investing in both Swiss Re and COFACE SA 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 Swiss Re and COFACE SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Re AG and COFACE SA, you can compare the effects of market volatilities on Swiss Re and COFACE SA 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 Swiss Re with a short position of COFACE SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and COFACE SA.
Diversification Opportunities for Swiss Re and COFACE SA
Excellent diversification
The 3 months correlation between Swiss and COFACE is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG and COFACE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFACE SA and Swiss Re 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 Swiss Re AG are associated (or correlated) with COFACE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFACE SA has no effect on the direction of Swiss Re i.e., Swiss Re and COFACE SA go up and down completely randomly.
Pair Corralation between Swiss Re and COFACE SA
Assuming the 90 days trading horizon Swiss Re AG is expected to generate 1.23 times more return on investment than COFACE SA. However, Swiss Re is 1.23 times more volatile than COFACE SA. It trades about 0.08 of its potential returns per unit of risk. COFACE SA is currently generating about 0.02 per unit of risk. If you would invest 2,900 in Swiss Re AG on September 23, 2024 and sell it today you would earn a total of 520.00 from holding Swiss Re AG or generate 17.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Re AG vs. COFACE SA
Performance |
| Timeline |
| Swiss Re AG |
| COFACE SA |
Swiss Re and COFACE SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Re and COFACE SA
The main advantage of trading using opposite Swiss Re and COFACE SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Re position performs unexpectedly, COFACE SA 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 COFACE SA will offset losses from the drop in COFACE SA's long position.| Swiss Re vs. MUENCHRUECKUNSADR 110 | Swiss Re vs. HANNRUECKVSE ADR 12ON | Swiss Re vs. Everest Group | Swiss Re vs. Reinsurance Group of |
| COFACE SA vs. MUENCHRUECKUNSADR 110 | COFACE SA vs. Swiss Re AG | COFACE SA vs. HANNRUECKVSE ADR 12ON | COFACE SA vs. Everest Group |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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