Correlation Between RenaissanceRe Holdings and Voya Financial

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

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

Diversification Opportunities for RenaissanceRe Holdings and Voya Financial

0.45

Correlation Coefficient

RenaissanceRe Holdings  Voya Financial

Very weak diversification

The 3 months correlation between RenaissanceRe and Voya is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial and RenaissanceRe Holdings 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 RenaissanceRe Holdings are associated (or correlated) with Voya Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Financial has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Voya Financial go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and Voya Financial

Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 0.23 times more return on investment than Voya Financial. However, RenaissanceRe Holdings is 4.28 times less risky than Voya Financial. It trades about -0.17 of its potential returns per unit of risk. Voya Financial is currently generating about -0.08 per unit of risk. If you would invest  2,454  in RenaissanceRe Holdings on September 23, 2024 and sell it today you would lose (133.00) from holding RenaissanceRe Holdings or give up 5.42% of portfolio value over 90 days.

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

RenaissanceRe Holdings  vs.  Voya Financial

RenaissanceRe Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Voya Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with RenaissanceRe Holdings and Voya Financial

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

The idea behind RenaissanceRe Holdings and Voya Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.