Correlation Between Hannover and BNRE Old

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

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

Diversification Opportunities for Hannover and BNRE Old

0.0

Correlation Coefficient

Hannover  BNRE Old

Pay attention - limited upside

The 3 months correlation between Hannover and BNRE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hannover Re and BNRE Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNRE Old and Hannover 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 Hannover Re are associated (or correlated) with BNRE Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNRE Old has no effect on the direction of Hannover i.e., Hannover and BNRE Old go up and down completely randomly.

Pair Corralation between Hannover and BNRE Old

If you would invest  4,166  in Hannover Re on December 31, 2024 and sell it today you would earn a total of  830.00  from holding Hannover Re or generate 19.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Hannover Re  vs.  BNRE Old

Hannover Re

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hannover Re are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hannover showed solid returns over the last few months and may actually be approaching a breakup point.

BNRE Old

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Hannover and BNRE Old

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

The idea behind Hannover Re and BNRE Old 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..