Correlation Between Maiden Holdings and Muenchener Rueckver

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

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

Diversification Opportunities for Maiden Holdings and Muenchener Rueckver

0.11

Correlation Coefficient

Maiden Holdings  Muenchener Rueckver

Average diversification

The 3 months correlation between Maiden and Muenchener is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings and Muenchener Rueckver Ges in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muenchener Rueckver Ges and Maiden Holdings 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 Maiden Holdings are associated (or correlated) with Muenchener Rueckver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muenchener Rueckver Ges has no effect on the direction of Maiden Holdings i.e., Maiden Holdings and Muenchener Rueckver go up and down completely randomly.

Pair Corralation between Maiden Holdings and Muenchener Rueckver

Given the investment horizon of 90 days Maiden Holdings is expected to generate 3.06 times more return on investment than Muenchener Rueckver. However, Maiden Holdings is 3.06 times more volatile than Muenchener Rueckver Ges. It trades about -0.02 of its potential returns per unit of risk. Muenchener Rueckver Ges is currently generating about -0.07 per unit of risk. If you would invest  170.00  in Maiden Holdings on August 31, 2024 and sell it today you would lose (14.00) from holding Maiden Holdings or give up 8.24% of portfolio value over 90 days.

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

Maiden Holdings  vs.  Muenchener Rueckver Ges

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.

Muenchener Rueckver Ges

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Muenchener Rueckver Ges has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Muenchener Rueckver is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Maiden Holdings and Muenchener Rueckver

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

The idea behind Maiden Holdings and Muenchener Rueckver Ges 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.