Correlation Between Reinsurance Group and SCOR SE

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

Diversification Opportunities for Reinsurance Group and SCOR SE

0.63

Correlation Coefficient

Reinsurance Group  SCOR SE

Poor diversification

The 3 months correlation between Reinsurance and SCOR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR SE 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 SCOR SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR SE has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and SCOR SE go up and down completely randomly.

Pair Corralation between Reinsurance Group and SCOR SE

Assuming the 90 days trading horizon Reinsurance Group is expected to generate 35.79 times less return on investment than SCOR SE. In addition to that, Reinsurance Group is 1.04 times more volatile than SCOR SE. It trades about 0.0 of its total potential returns per unit of risk. SCOR SE is currently generating about 0.13 per unit of volatility. If you would invest  1,955  in SCOR SE on September 24, 2024 and sell it today you would earn a total of  355.00  from holding SCOR SE or generate 18.16% return on investment over 90 days.

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

Reinsurance Group of  vs.  SCOR SE

Reinsurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

SCOR SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SCOR SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reinsurance Group and SCOR SE

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

The idea behind Reinsurance Group of and SCOR SE 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.