Correlation Between Reinsurance Group and Muenchener Rueckver

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

Diversification Opportunities for Reinsurance Group and Muenchener Rueckver

-0.43

Correlation Coefficient

Reinsurance Group  Muenchener Rueckver

Very good diversification

The 3 months correlation between Reinsurance and Muenchener is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of 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 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 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 Reinsurance Group i.e., Reinsurance Group and Muenchener Rueckver go up and down completely randomly.

Pair Corralation between Reinsurance Group and Muenchener Rueckver

Considering the 90-day investment horizon Reinsurance Group of is expected to under-perform the Muenchener Rueckver. But the stock apears to be less risky and, when comparing its historical volatility, Reinsurance Group of is 1.02 times less risky than Muenchener Rueckver. The stock trades about -0.04 of its potential returns per unit of risk. The Muenchener Rueckver Ges is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,086  in Muenchener Rueckver Ges on September 19, 2024 and sell it today you would earn a total of  6.00  from holding Muenchener Rueckver Ges or generate 0.55% return on investment over 90 days.

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

Reinsurance Group of  vs.  Muenchener Rueckver Ges

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 somewhat strong technical and fundamental indicators, Reinsurance Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Muenchener Rueckver Ges

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Muenchener Rueckver Ges are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Muenchener Rueckver is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reinsurance Group and Muenchener Rueckver

The main advantage of trading using opposite Reinsurance Group and Muenchener Rueckver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group 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 Reinsurance Group of 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.