Correlation Between Reinsurance Group and AURUBIS Dusseldorf

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

Diversification Opportunities for Reinsurance Group and AURUBIS Dusseldorf

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Reinsurance and AURUBIS is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and AURUBIS Dusseldorf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURUBIS Dusseldorf 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 AURUBIS Dusseldorf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURUBIS Dusseldorf has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and AURUBIS Dusseldorf go up and down completely randomly.

Pair Corralation between Reinsurance Group and AURUBIS Dusseldorf

Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 1.37 times more return on investment than AURUBIS Dusseldorf. However, Reinsurance Group is 1.37 times more volatile than AURUBIS Dusseldorf. It trades about 0.04 of its potential returns per unit of risk. AURUBIS Dusseldorf is currently generating about -0.46 per unit of risk. If you would invest  20,800  in Reinsurance Group of on October 9, 2024 and sell it today you would earn a total of  200.00  from holding Reinsurance Group of or generate 0.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Reinsurance Group of  vs.  AURUBIS Dusseldorf

 Performance 
       Timeline  
Reinsurance Group 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
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 fragile basic indicators, Reinsurance Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.
AURUBIS Dusseldorf 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AURUBIS Dusseldorf are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AURUBIS Dusseldorf unveiled solid returns over the last few months and may actually be approaching a breakup point.

Reinsurance Group and AURUBIS Dusseldorf Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Reinsurance Group and AURUBIS Dusseldorf

The main advantage of trading using opposite Reinsurance Group and AURUBIS Dusseldorf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, AURUBIS Dusseldorf 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 AURUBIS Dusseldorf will offset losses from the drop in AURUBIS Dusseldorf's long position.
The idea behind Reinsurance Group of and AURUBIS Dusseldorf 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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