Correlation Between Mnchener Rckversicherungs and Muenchener Rueckver

Can any of the company-specific risk be diversified away by investing in both Mnchener Rckversicherungs and Muenchener Rueckver 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 Mnchener Rckversicherungs and Muenchener Rueckver into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft and Muenchener Rueckver Ges, you can compare the effects of market volatilities on Mnchener Rckversicherungs and Muenchener Rueckver 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 Mnchener Rckversicherungs with a short position of Muenchener Rueckver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mnchener Rckversicherungs and Muenchener Rueckver.

Diversification Opportunities for Mnchener Rckversicherungs and Muenchener Rueckver

0.96

Correlation Coefficient

Mnchener Rckversicherungs  Muenchener Rueckver

Almost no diversification

The 3 months correlation between Mnchener and Muenchener is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Mnchener Rckversicherungs Gese and Muenchener Rueckver Ges in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muenchener Rueckver Ges and Mnchener Rckversicherungs 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 Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft are associated (or correlated) with Muenchener Rueckver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muenchener Rueckver Ges has no effect on the direction of Mnchener Rckversicherungs i.e., Mnchener Rckversicherungs and Muenchener Rueckver go up and down completely randomly.

Pair Corralation between Mnchener Rckversicherungs and Muenchener Rueckver

Assuming the 90 days horizon Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft is expected to under-perform the Muenchener Rueckver. In addition to that, Mnchener Rckversicherungs is 1.1 times more volatile than Muenchener Rueckver Ges. It trades about -0.02 of its total potential returns per unit of risk. Muenchener Rueckver Ges is currently generating about -0.01 per unit of volatility. If you would invest  1,086  in Muenchener Rueckver Ges on September 20, 2024 and sell it today you would lose (13.00) from holding Muenchener Rueckver Ges or give up 1.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Mnchener Rckversicherungs Gese  vs.  Muenchener Rueckver Ges

Mnchener Rckversicherungs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Mnchener Rckversicherungs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Muenchener Rueckver Ges

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Muenchener Rueckver Ges has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Muenchener Rueckver is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mnchener Rckversicherungs and Muenchener Rueckver

The main advantage of trading using opposite Mnchener Rckversicherungs and Muenchener Rueckver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mnchener Rckversicherungs position performs unexpectedly, Muenchener Rueckver 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 Muenchener Rueckver will offset losses from the drop in Muenchener Rueckver's long position.

The idea behind Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft and Muenchener Rueckver Ges 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.