Correlation Between RenaissanceRe Holdings and Oaktree Capital

Can any of the company-specific risk be diversified away by investing in both RenaissanceRe Holdings and Oaktree Capital 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 RenaissanceRe Holdings and Oaktree Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RenaissanceRe Holdings and Oaktree Capital Group, you can compare the effects of market volatilities on RenaissanceRe Holdings and Oaktree Capital 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 RenaissanceRe Holdings with a short position of Oaktree Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of RenaissanceRe Holdings and Oaktree Capital.

Diversification Opportunities for RenaissanceRe Holdings and Oaktree Capital

0.31

Correlation Coefficient

RenaissanceRe Holdings  Oaktree Capital

Weak diversification

The 3 months correlation between RenaissanceRe and Oaktree is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and Oaktree Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Capital Group and RenaissanceRe 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 RenaissanceRe Holdings are associated (or correlated) with Oaktree Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Capital Group has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Oaktree Capital go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and Oaktree Capital

Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 0.49 times more return on investment than Oaktree Capital. However, RenaissanceRe Holdings is 2.06 times less risky than Oaktree Capital. It trades about 0.01 of its potential returns per unit of risk. Oaktree Capital Group is currently generating about 0.0 per unit of risk. If you would invest  2,420  in RenaissanceRe Holdings on September 4, 2024 and sell it today you would earn a total of  3.00  from holding RenaissanceRe Holdings or generate 0.12% return on investment over 90 days.

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

RenaissanceRe Holdings  vs.  Oaktree Capital Group

RenaissanceRe Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RenaissanceRe Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RenaissanceRe Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Oaktree Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oaktree Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Oaktree Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RenaissanceRe Holdings and Oaktree Capital

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

The idea behind RenaissanceRe Holdings and Oaktree Capital Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.