Correlation Between Muenchener Rueckver and Maiden Holdings

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

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

Diversification Opportunities for Muenchener Rueckver and Maiden Holdings

-0.85

Correlation Coefficient

Muenchener Rueckver  Maiden Holdings

Pay attention - limited upside

The 3 months correlation between Muenchener and Maiden is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Muenchener Rueckver Ges and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings and Muenchener Rueckver 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 Muenchener Rueckver Ges are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of Muenchener Rueckver i.e., Muenchener Rueckver and Maiden Holdings go up and down completely randomly.

Pair Corralation between Muenchener Rueckver and Maiden Holdings

Assuming the 90 days horizon Muenchener Rueckver Ges is expected to generate 0.18 times more return on investment than Maiden Holdings. However, Muenchener Rueckver Ges is 5.65 times less risky than Maiden Holdings. It trades about 0.26 of its potential returns per unit of risk. Maiden Holdings is currently generating about -0.09 per unit of risk. If you would invest  1,010  in Muenchener Rueckver Ges on December 30, 2024 and sell it today you would earn a total of  267.00  from holding Muenchener Rueckver Ges or generate 26.44% return on investment over 90 days.

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

Muenchener Rueckver Ges  vs.  Maiden Holdings

Muenchener Rueckver Ges

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Muenchener Rueckver Ges are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Muenchener Rueckver showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Muenchener Rueckver and Maiden Holdings

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

The idea behind Muenchener Rueckver Ges and Maiden Holdings 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.