Correlation Between Oxbridge and Brookfield Reinsurance

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

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

Diversification Opportunities for Oxbridge and Brookfield Reinsurance

0.68

Correlation Coefficient

Oxbridge  Brookfield Reinsurance

Poor diversification

The 3 months correlation between Oxbridge and Brookfield is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Oxbridge Re Holdings and Brookfield Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Reinsurance and Oxbridge 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 Oxbridge Re Holdings are associated (or correlated) with Brookfield Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Reinsurance has no effect on the direction of Oxbridge i.e., Oxbridge and Brookfield Reinsurance go up and down completely randomly.

Pair Corralation between Oxbridge and Brookfield Reinsurance

Given the investment horizon of 90 days Oxbridge Re Holdings is expected to generate 2.8 times more return on investment than Brookfield Reinsurance. However, Oxbridge is 2.8 times more volatile than Brookfield Reinsurance. It trades about 0.13 of its potential returns per unit of risk. Brookfield Reinsurance is currently generating about 0.26 per unit of risk. If you would invest  228.00  in Oxbridge Re Holdings on September 2, 2024 and sell it today you would earn a total of  80.00  from holding Oxbridge Re Holdings or generate 35.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.56%
Values	Daily Returns

Oxbridge Re Holdings  vs.  Brookfield Reinsurance

Oxbridge Re Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oxbridge Re Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Oxbridge reported solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Reinsurance

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Brookfield Reinsurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady basic indicators, Brookfield Reinsurance exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oxbridge and Brookfield Reinsurance

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

The idea behind Oxbridge Re Holdings and Brookfield Reinsurance 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.