Correlation Between Maiden Holdings and Reinsurance Group

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

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

Diversification Opportunities for Maiden Holdings and Reinsurance Group

0.6

Correlation Coefficient

Maiden Holdings  Reinsurance Group

Poor diversification

The 3 months correlation between Maiden and Reinsurance is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Maiden Holdings i.e., Maiden Holdings and Reinsurance Group go up and down completely randomly.

Pair Corralation between Maiden Holdings and Reinsurance Group

Given the investment horizon of 90 days Maiden Holdings is expected to under-perform the Reinsurance Group. In addition to that, Maiden Holdings is 4.16 times more volatile than Reinsurance Group of. It trades about -0.09 of its total potential returns per unit of risk. Reinsurance Group of is currently generating about -0.05 per unit of volatility. If you would invest  21,145  in Reinsurance Group of on December 30, 2024 and sell it today you would lose (1,559) from holding Reinsurance Group of or give up 7.37% of portfolio value over 90 days.

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

Maiden Holdings  vs.  Reinsurance Group of

Maiden Holdings

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Reinsurance Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reinsurance Group of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Maiden Holdings and Reinsurance Group

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

The idea behind Maiden Holdings and Reinsurance Group of 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.