Correlation Between RenaissanceRe Holdings and Oxbridge

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

By analyzing existing cross correlation between RenaissanceRe Holdings and Oxbridge Re Holdings, you can compare the effects of market volatilities on RenaissanceRe Holdings and Oxbridge 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 Oxbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of RenaissanceRe Holdings and Oxbridge.

Diversification Opportunities for RenaissanceRe Holdings and Oxbridge

-0.22

Correlation Coefficient

RenaissanceRe Holdings  Oxbridge

Very good diversification

The 3 months correlation between RenaissanceRe and Oxbridge is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and Oxbridge Re Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxbridge Re Holdings 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 Oxbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxbridge Re Holdings has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Oxbridge go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and Oxbridge

Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 321.7 times less return on investment than Oxbridge. But when comparing it to its historical volatility, RenaissanceRe Holdings is 11.43 times less risky than Oxbridge. It trades about 0.01 of its potential returns per unit of risk. Oxbridge Re Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  229.00  in Oxbridge Re Holdings on September 4, 2024 and sell it today you would earn a total of  161.00  from holding Oxbridge Re Holdings or generate 70.31% return on investment over 90 days.

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

RenaissanceRe Holdings  vs.  Oxbridge Re Holdings

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.

Oxbridge Re Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oxbridge Re Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Oxbridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RenaissanceRe Holdings and Oxbridge

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

The idea behind RenaissanceRe Holdings and Oxbridge Re Holdings 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.