Correlation Between Maiden Holdings and Swiss Re

Can any of the company-specific risk be diversified away by investing in both Maiden 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 Maiden 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 Maiden Holdings and Swiss Re AG, you can compare the effects of market volatilities on Maiden 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 Maiden Holdings with a short position of Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maiden Holdings and Swiss Re.

Diversification Opportunities for Maiden Holdings and Swiss Re

-0.53

Correlation Coefficient

Maiden Holdings  Swiss Re

Excellent diversification

The 3 months correlation between Maiden and Swiss is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Maiden 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 Maiden 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 Maiden 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 Maiden Holdings i.e., Maiden Holdings and Swiss Re go up and down completely randomly.

Pair Corralation between Maiden Holdings and Swiss Re

Given the investment horizon of 90 days Maiden Holdings is expected to under-perform the Swiss Re. In addition to that, Maiden Holdings is 2.85 times more volatile than Swiss Re AG. It trades about -0.02 of its total potential returns per unit of risk. Swiss Re AG is currently generating about 0.1 per unit of volatility. If you would invest  13,521  in Swiss Re AG on September 19, 2024 and sell it today you would earn a total of  1,269  from holding Swiss Re AG or generate 9.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Maiden Holdings  vs.  Swiss Re AG

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maiden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Maiden Holdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Swiss Re AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Re AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Swiss Re may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Maiden Holdings and Swiss Re

The main advantage of trading using opposite Maiden Holdings and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maiden 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.

The idea behind Maiden Holdings and Swiss Re AG 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.