Correlation Between RenaissanceRe Holdings and Athene Holding

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

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

Diversification Opportunities for RenaissanceRe Holdings and Athene Holding

0.64

Correlation Coefficient

RenaissanceRe Holdings  Athene Holding

Poor diversification

The 3 months correlation between RenaissanceRe and Athene is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and Athene Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athene Holding 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 Athene Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athene Holding has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Athene Holding go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and Athene Holding

Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to under-perform the Athene Holding. In addition to that, RenaissanceRe Holdings is 1.01 times more volatile than Athene Holding. It trades about -0.12 of its total potential returns per unit of risk. Athene Holding is currently generating about -0.09 per unit of volatility. If you would invest  1,867  in Athene Holding on September 19, 2024 and sell it today you would lose (44.00) from holding Athene Holding or give up 2.36% of portfolio value over 90 days.

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

RenaissanceRe Holdings  vs.  Athene Holding

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.

Athene Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athene Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Athene Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with RenaissanceRe Holdings and Athene Holding

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

The idea behind RenaissanceRe Holdings and Athene Holding 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.