Correlation Between SiriusPoint and Hannover Rck

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

By analyzing existing cross correlation between SiriusPoint and Hannover Rck SE, you can compare the effects of market volatilities on SiriusPoint and Hannover Rck 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 SiriusPoint with a short position of Hannover Rck. Check out your portfolio center. Please also check ongoing floating volatility patterns of SiriusPoint and Hannover Rck.

Diversification Opportunities for SiriusPoint and Hannover Rck

0.82

Correlation Coefficient

SiriusPoint  Hannover Rck

Very poor diversification

The 3 months correlation between SiriusPoint and Hannover is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SiriusPoint and Hannover Rck SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Rck SE and SiriusPoint 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 SiriusPoint are associated (or correlated) with Hannover Rck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Rck SE has no effect on the direction of SiriusPoint i.e., SiriusPoint and Hannover Rck go up and down completely randomly.

Pair Corralation between SiriusPoint and Hannover Rck

Assuming the 90 days trading horizon SiriusPoint is expected to generate 2.73 times less return on investment than Hannover Rck. But when comparing it to its historical volatility, SiriusPoint is 2.58 times less risky than Hannover Rck. It trades about 0.06 of its potential returns per unit of risk. Hannover Rck SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14,575  in Hannover Rck SE on September 19, 2024 and sell it today you would earn a total of  11,730  from holding Hannover Rck SE or generate 80.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

SiriusPoint  vs.  Hannover Rck SE

SiriusPoint

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SiriusPoint are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, SiriusPoint is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hannover Rck SE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hannover Rck SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hannover Rck reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SiriusPoint and Hannover Rck

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

The idea behind SiriusPoint and Hannover Rck SE 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.