Correlation Between Reinsurance Group and 7125 Percent

Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and 7125 Percent 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 7125 Percent 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 7125 percent Fixed Rate, you can compare the effects of market volatilities on Reinsurance Group and 7125 Percent 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 7125 Percent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and 7125 Percent.

Diversification Opportunities for Reinsurance Group and 7125 Percent

0.36

Correlation Coefficient

Reinsurance Group  7125 Percent

Weak diversification

The 3 months correlation between Reinsurance and 7125 is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and 7125 percent Fixed Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 7125 percent Fixed 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 7125 Percent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 7125 percent Fixed has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and 7125 Percent go up and down completely randomly.

Pair Corralation between Reinsurance Group and 7125 Percent

Considering the 90-day investment horizon Reinsurance Group of is expected to generate 0.94 times more return on investment than 7125 Percent. However, Reinsurance Group of is 1.07 times less risky than 7125 Percent. It trades about 0.09 of its potential returns per unit of risk. 7125 percent Fixed Rate is currently generating about 0.04 per unit of risk. If you would invest  2,420  in Reinsurance Group of on December 21, 2024 and sell it today you would earn a total of  44.00  from holding Reinsurance Group of or generate 1.82% 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.  7125 percent Fixed Rate

Reinsurance Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reinsurance Group of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Reinsurance Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

7125 percent Fixed

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 7125 percent Fixed Rate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, 7125 Percent is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Reinsurance Group and 7125 Percent

The main advantage of trading using opposite Reinsurance Group and 7125 Percent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, 7125 Percent 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 7125 Percent will offset losses from the drop in 7125 Percent's long position.

The idea behind Reinsurance Group of and 7125 percent Fixed Rate 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.