Correlation Between Münchener Rückversicherung and Swiss Life

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

Diversification Opportunities for Münchener Rückversicherung and Swiss Life

0.39

Correlation Coefficient

Münchener Rückversicherung  Swiss Life

Weak diversification

The 3 months correlation between Münchener and Swiss is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mnchener Rckversicherungs Gese and Swiss Life Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Life Holding and Münchener Rückversicherung 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 Swiss Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Life Holding has no effect on the direction of Münchener Rückversicherung i.e., Münchener Rückversicherung and Swiss Life go up and down completely randomly.

Pair Corralation between Münchener Rückversicherung and Swiss Life

Assuming the 90 days horizon Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft is expected to under-perform the Swiss Life. In addition to that, Münchener Rückversicherung is 1.2 times more volatile than Swiss Life Holding. It trades about -0.02 of its total potential returns per unit of risk. Swiss Life Holding is currently generating about 0.04 per unit of volatility. If you would invest  4,044  in Swiss Life Holding on September 3, 2024 and sell it today you would earn a total of  115.00  from holding Swiss Life Holding or generate 2.84% return on investment over 90 days.

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

Mnchener Rckversicherungs Gese  vs.  Swiss Life Holding

Münchener Rückversicherung

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, Münchener Rückversicherung is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Swiss Life Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Swiss Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Münchener Rückversicherung and Swiss Life

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

The idea behind Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft and Swiss Life Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.