Correlation Between Muenchener Rueckver and Reinsurance Group

Can any of the company-specific risk be diversified away by investing in both Muenchener Rueckver 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 Muenchener Rueckver and Reinsurance Group 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 Reinsurance Group of, you can compare the effects of market volatilities on Muenchener Rueckver 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 Muenchener Rueckver with a short position of Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muenchener Rueckver and Reinsurance Group.

Diversification Opportunities for Muenchener Rueckver and Reinsurance Group

-0.44

Correlation Coefficient

Muenchener Rueckver  Reinsurance Group

Very good diversification

The 3 months correlation between Muenchener and Reinsurance is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Muenchener Rueckver Ges and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 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 Muenchener Rueckver i.e., Muenchener Rueckver and Reinsurance Group go up and down completely randomly.

Pair Corralation between Muenchener Rueckver and Reinsurance Group

Assuming the 90 days horizon Muenchener Rueckver Ges is expected to under-perform the Reinsurance Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Muenchener Rueckver Ges is 1.16 times less risky than Reinsurance Group. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Reinsurance Group of is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  21,723  in Reinsurance Group of on September 2, 2024 and sell it today you would earn a total of  1,117  from holding Reinsurance Group of or generate 5.14% return on investment over 90 days.

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

Muenchener Rueckver Ges  vs.  Reinsurance Group of

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.

Reinsurance Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reinsurance Group of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Reinsurance Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Muenchener Rueckver and Reinsurance Group

The main advantage of trading using opposite Muenchener Rueckver and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Muenchener Rueckver 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 Muenchener Rueckver Ges 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.