Correlation Between Swiss Re and CONAGRA FOODS

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

By analyzing existing cross correlation between Swiss Re AG and CONAGRA FOODS, you can compare the effects of market volatilities on Swiss Re and CONAGRA FOODS 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 Swiss Re with a short position of CONAGRA FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and CONAGRA FOODS.

Diversification Opportunities for Swiss Re and CONAGRA FOODS

-0.35

Correlation Coefficient

Swiss Re  CONAGRA FOODS

Very good diversification

The 3 months correlation between Swiss and CONAGRA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG and CONAGRA FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONAGRA FOODS and Swiss Re 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 Swiss Re AG are associated (or correlated) with CONAGRA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONAGRA FOODS has no effect on the direction of Swiss Re i.e., Swiss Re and CONAGRA FOODS go up and down completely randomly.

Pair Corralation between Swiss Re and CONAGRA FOODS

Assuming the 90 days trading horizon Swiss Re AG is expected to generate 1.14 times more return on investment than CONAGRA FOODS. However, Swiss Re is 1.14 times more volatile than CONAGRA FOODS. It trades about 0.11 of its potential returns per unit of risk. CONAGRA FOODS is currently generating about -0.07 per unit of risk. If you would invest  3,420  in Swiss Re AG on December 22, 2024 and sell it today you would earn a total of  440.00  from holding Swiss Re AG or generate 12.87% return on investment over 90 days.

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

Swiss Re AG  vs.  CONAGRA FOODS

Swiss Re AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Re AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Swiss Re reported solid returns over the last few months and may actually be approaching a breakup point.

CONAGRA FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONAGRA FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Swiss Re and CONAGRA FOODS

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

The idea behind Swiss Re AG and CONAGRA FOODS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.