Correlation Between Reinsurance Group and BRAEMAR HOTELS

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

Diversification Opportunities for Reinsurance Group and BRAEMAR HOTELS

0.39

Correlation Coefficient

Reinsurance Group  BRAEMAR HOTELS

Weak diversification

The 3 months correlation between Reinsurance and BRAEMAR is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES 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 BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and BRAEMAR HOTELS go up and down completely randomly.

Pair Corralation between Reinsurance Group and BRAEMAR HOTELS

Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 0.36 times more return on investment than BRAEMAR HOTELS. However, Reinsurance Group of is 2.8 times less risky than BRAEMAR HOTELS. It trades about 0.07 of its potential returns per unit of risk. BRAEMAR HOTELS RES is currently generating about 0.0 per unit of risk. If you would invest  13,214  in Reinsurance Group of on October 24, 2024 and sell it today you would earn a total of  8,186  from holding Reinsurance Group of or generate 61.95% return on investment over 90 days.

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

Reinsurance Group of  vs.  BRAEMAR HOTELS RES

Reinsurance Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reinsurance Group of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Reinsurance Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BRAEMAR HOTELS RES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRAEMAR HOTELS RES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BRAEMAR HOTELS 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 BRAEMAR HOTELS

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

The idea behind Reinsurance Group of and BRAEMAR HOTELS RES 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.