Correlation Between Reinsurance Group and Everest

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

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

Diversification Opportunities for Reinsurance Group and Everest

-0.01

Correlation Coefficient

Reinsurance Group  Everest

Good diversification

The 3 months correlation between Reinsurance and Everest is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Everest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Group and Reinsurance Group 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 Reinsurance Group of are associated (or correlated) with Everest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Group has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Everest go up and down completely randomly.

Pair Corralation between Reinsurance Group and Everest

Considering the 90-day investment horizon Reinsurance Group of is expected to generate 0.79 times more return on investment than Everest. However, Reinsurance Group of is 1.27 times less risky than Everest. It trades about 0.06 of its potential returns per unit of risk. Everest Group is currently generating about 0.0 per unit of risk. If you would invest  21,558  in Reinsurance Group of on September 5, 2024 and sell it today you would earn a total of  1,023  from holding Reinsurance Group of or generate 4.75% return on investment over 90 days.

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

Reinsurance Group of  vs.  Everest Group

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.

Everest Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everest Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Reinsurance Group and Everest

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

The idea behind Reinsurance Group of and Everest Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.