Correlation Between RenaissanceRe Holdings and Colas SA

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

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

Diversification Opportunities for RenaissanceRe Holdings and Colas SA

0.55

Correlation Coefficient

RenaissanceRe Holdings  Colas SA

Very weak diversification

The 3 months correlation between RenaissanceRe and Colas is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and Colas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colas SA 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 Colas SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colas SA has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Colas SA go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and Colas SA

If you would invest  1,810  in RenaissanceRe Holdings on September 4, 2024 and sell it today you would earn a total of  2.00  from holding RenaissanceRe Holdings or generate 0.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

RenaissanceRe Holdings  vs.  Colas SA

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.

Colas SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RenaissanceRe Holdings and Colas SA

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

The idea behind RenaissanceRe Holdings and Colas SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..