Correlation Between RenaissanceRe Holdings and SCOR PK

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

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

Diversification Opportunities for RenaissanceRe Holdings and SCOR PK

-0.21

Correlation Coefficient

RenaissanceRe Holdings  SCOR PK

Very good diversification

The 3 months correlation between RenaissanceRe and SCOR is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK 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 SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and SCOR PK go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and SCOR PK

Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 1.67 times less return on investment than SCOR PK. But when comparing it to its historical volatility, RenaissanceRe Holdings is 3.71 times less risky than SCOR PK. It trades about 0.05 of its potential returns per unit of risk. SCOR PK is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  207.00  in SCOR PK on September 19, 2024 and sell it today you would earn a total of  31.00  from holding SCOR PK or generate 14.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

RenaissanceRe Holdings  vs.  SCOR PK

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.

SCOR PK

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SCOR PK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RenaissanceRe Holdings and SCOR PK

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

The idea behind RenaissanceRe Holdings and SCOR PK 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.