Correlation Between Swiss Re and Oxbridge
Can any of the company-specific risk be diversified away by investing in both Swiss Re and Oxbridge 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 Oxbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Re and Oxbridge Re Holdings, you can compare the effects of market volatilities on Swiss Re and Oxbridge 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 Oxbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and Oxbridge.
Diversification Opportunities for Swiss Re and Oxbridge
Poor diversification
The 3 months correlation between Swiss and Oxbridge is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re and Oxbridge Re Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxbridge Re Holdings 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 are associated (or correlated) with Oxbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxbridge Re Holdings has no effect on the direction of Swiss Re i.e., Swiss Re and Oxbridge go up and down completely randomly.
Pair Corralation between Swiss Re and Oxbridge
Assuming the 90 days horizon Swiss Re is expected to generate 5.26 times less return on investment than Oxbridge. But when comparing it to its historical volatility, Swiss Re is 6.67 times less risky than Oxbridge. It trades about 0.18 of its potential returns per unit of risk. Oxbridge Re Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 374.00 in Oxbridge Re Holdings on October 20, 2024 and sell it today you would earn a total of 59.00 from holding Oxbridge Re Holdings or generate 15.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Re vs. Oxbridge Re Holdings
Performance |
| Timeline |
| Swiss Re |
| Oxbridge Re Holdings |
Swiss Re and Oxbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Re and Oxbridge
The main advantage of trading using opposite Swiss Re and Oxbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Re position performs unexpectedly, Oxbridge 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 Oxbridge will offset losses from the drop in Oxbridge's long position.The idea behind Swiss Re and Oxbridge Re Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Oxbridge vs. Muenchener Rueckver Ges | Oxbridge vs. Greenlight Capital Re | Oxbridge vs. Maiden Holdings | Oxbridge vs. Swiss Re |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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