Correlation Between Axalta Coating and RENIASSANCERE

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

By analyzing existing cross correlation between Axalta Coating Systems and RENIASSANCERE FIN INC, you can compare the effects of market volatilities on Axalta Coating and RENIASSANCERE 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 Axalta Coating with a short position of RENIASSANCERE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and RENIASSANCERE.

Diversification Opportunities for Axalta Coating and RENIASSANCERE

0.23

Correlation Coefficient

Axalta Coating  RENIASSANCERE

Modest diversification

The 3 months correlation between Axalta and RENIASSANCERE is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and RENIASSANCERE FIN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENIASSANCERE FIN INC and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with RENIASSANCERE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENIASSANCERE FIN INC has no effect on the direction of Axalta Coating i.e., Axalta Coating and RENIASSANCERE go up and down completely randomly.

Pair Corralation between Axalta Coating and RENIASSANCERE

Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 3.73 times more return on investment than RENIASSANCERE. However, Axalta Coating is 3.73 times more volatile than RENIASSANCERE FIN INC. It trades about 0.1 of its potential returns per unit of risk. RENIASSANCERE FIN INC is currently generating about -0.12 per unit of risk. If you would invest  3,516  in Axalta Coating Systems on September 14, 2024 and sell it today you would earn a total of  391.00  from holding Axalta Coating Systems or generate 11.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	69.84%
Values	Daily Returns

Axalta Coating Systems  vs.  RENIASSANCERE FIN INC

Axalta Coating Systems

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axalta Coating Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Axalta Coating may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RENIASSANCERE FIN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RENIASSANCERE FIN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RENIASSANCERE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Axalta Coating and RENIASSANCERE

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

The idea behind Axalta Coating Systems and RENIASSANCERE FIN INC 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.