Correlation Between RenaissanceRe Holdings and MUENCHRUECKUNSADR

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

By analyzing existing cross correlation between RenaissanceRe Holdings and MUENCHRUECKUNSADR 110, you can compare the effects of market volatilities on RenaissanceRe Holdings and MUENCHRUECKUNSADR 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 MUENCHRUECKUNSADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of RenaissanceRe Holdings and MUENCHRUECKUNSADR.

Diversification Opportunities for RenaissanceRe Holdings and MUENCHRUECKUNSADR

0.31

Correlation Coefficient

RenaissanceRe Holdings  MUENCHRUECKUNSADR

Weak diversification

The 3 months correlation between RenaissanceRe and MUENCHRUECKUNSADR is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and MUENCHRUECKUNSADR 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUENCHRUECKUNSADR 110 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 MUENCHRUECKUNSADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUENCHRUECKUNSADR 110 has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and MUENCHRUECKUNSADR go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and MUENCHRUECKUNSADR

Assuming the 90 days horizon RenaissanceRe Holdings is expected to generate 1.36 times less return on investment than MUENCHRUECKUNSADR. In addition to that, RenaissanceRe Holdings is 1.08 times more volatile than MUENCHRUECKUNSADR 110. It trades about 0.06 of its total potential returns per unit of risk. MUENCHRUECKUNSADR 110 is currently generating about 0.09 per unit of volatility. If you would invest  627.00  in MUENCHRUECKUNSADR 110 on October 12, 2024 and sell it today you would earn a total of  403.00  from holding MUENCHRUECKUNSADR 110 or generate 64.27% return on investment over 90 days.

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

RenaissanceRe Holdings  vs.  MUENCHRUECKUNSADR 110

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.

MUENCHRUECKUNSADR 110

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MUENCHRUECKUNSADR 110 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MUENCHRUECKUNSADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RenaissanceRe Holdings and MUENCHRUECKUNSADR

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

The idea behind RenaissanceRe Holdings and MUENCHRUECKUNSADR 110 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.