Correlation Between Swiss Re and Siriuspoint

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

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

Diversification Opportunities for Swiss Re and Siriuspoint

0.9

Correlation Coefficient

Swiss Re  Siriuspoint

Almost no diversification

The 3 months correlation between Swiss and Siriuspoint is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 are associated (or correlated) with Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Swiss Re i.e., Swiss Re and Siriuspoint go up and down completely randomly.

Pair Corralation between Swiss Re and Siriuspoint

Assuming the 90 days horizon Swiss Re is expected to generate 0.77 times more return on investment than Siriuspoint. However, Swiss Re is 1.3 times less risky than Siriuspoint. It trades about 0.08 of its potential returns per unit of risk. Siriuspoint is currently generating about 0.02 per unit of risk. If you would invest  3,421  in Swiss Re on September 20, 2024 and sell it today you would earn a total of  275.00  from holding Swiss Re or generate 8.04% return on investment over 90 days.

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

Swiss Re  vs.  Siriuspoint

Swiss Re

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Re are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Swiss Re may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Siriuspoint

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Siriuspoint is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Swiss Re and Siriuspoint

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

The idea behind Swiss Re and Siriuspoint 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.