Correlation Between Reinsurance Group and Mnchener Rckversicherungs

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

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

Diversification Opportunities for Reinsurance Group and Mnchener Rckversicherungs

-0.28

Correlation Coefficient

Reinsurance Group  Mnchener Rckversicherungs

Very good diversification

The 3 months correlation between Reinsurance and Mnchener is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Mnchener Rckversicherungs Gese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mnchener Rckversicherungs and Reinsurance Group 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 Reinsurance Group of are associated (or correlated) with Mnchener Rckversicherungs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mnchener Rckversicherungs has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Mnchener Rckversicherungs go up and down completely randomly.

Pair Corralation between Reinsurance Group and Mnchener Rckversicherungs

Considering the 90-day investment horizon Reinsurance Group is expected to generate 1.59 times less return on investment than Mnchener Rckversicherungs. But when comparing it to its historical volatility, Reinsurance Group of is 1.58 times less risky than Mnchener Rckversicherungs. It trades about 0.06 of its potential returns per unit of risk. Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  30,008  in Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft on September 20, 2024 and sell it today you would earn a total of  22,177  from holding Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft or generate 73.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.15%
Values	Daily Returns

Reinsurance Group of  vs.  Mnchener Rckversicherungs Gese

Reinsurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reinsurance Group of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Reinsurance Group and Mnchener Rckversicherungs

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

The idea behind Reinsurance Group of and Mnchener Rckversicherungs Gesellschaft Aktiengesellschaft 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .