Correlation Between Swiss Re and Maiden Holdings

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

By analyzing existing cross correlation between Swiss Re AG and Maiden Holdings, you can compare the effects of market volatilities on Swiss Re and Maiden Holdings 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 Swiss Re with a short position of Maiden Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and Maiden Holdings.

Diversification Opportunities for Swiss Re and Maiden Holdings

-0.53

Correlation Coefficient

Swiss Re  Maiden Holdings

Excellent diversification

The 3 months correlation between Swiss and Maiden is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings and Swiss Re 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 Swiss Re AG are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of Swiss Re i.e., Swiss Re and Maiden Holdings go up and down completely randomly.

Pair Corralation between Swiss Re and Maiden Holdings

Assuming the 90 days horizon Swiss Re AG is expected to generate 0.35 times more return on investment than Maiden Holdings. However, Swiss Re AG is 2.85 times less risky than Maiden Holdings. It trades about 0.1 of its potential returns per unit of risk. Maiden Holdings is currently generating about -0.02 per unit of risk. If you would invest  13,521  in Swiss Re AG on September 19, 2024 and sell it today you would earn a total of  1,269  from holding Swiss Re AG or generate 9.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Swiss Re AG  vs.  Maiden Holdings

Swiss Re AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Re AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Swiss Re may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Swiss Re and Maiden Holdings

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

The idea behind Swiss Re AG and Maiden 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 Valuation module to check real value of public entities based on technical and fundamental data.