Correlation Between RE Old and Old Republic

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Can any of the company-specific risk be diversified away by investing in both RE Old and Old Republic 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 RE Old and Old Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RE Old and Old Republic International, you can compare the effects of market volatilities on RE Old and Old Republic 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 RE Old with a short position of Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of RE Old and Old Republic.

Diversification Opportunities for RE Old and Old Republic

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between RE Old and Old is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding RE Old and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna and RE Old 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 RE Old are associated (or correlated) with Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of RE Old i.e., RE Old and Old Republic go up and down completely randomly.

Pair Corralation between RE Old and Old Republic

Allowing for the 90-day total investment horizon RE Old is expected to generate 1.37 times more return on investment than Old Republic. However, RE Old is 1.37 times more volatile than Old Republic International. It trades about 0.06 of its potential returns per unit of risk. Old Republic International is currently generating about 0.08 per unit of risk. If you would invest  27,989  in RE Old on December 29, 2023 and sell it today you would earn a total of  9,081  from holding RE Old or generate 32.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy68.43%
ValuesDaily Returns

RE Old  vs.  Old Republic International

 Performance 
       Timeline  
RE Old 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days RE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RE Old is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Old Republic Interna 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

RE Old and Old Republic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with RE Old and Old Republic

The main advantage of trading using opposite RE Old and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RE Old position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.
The idea behind RE Old and Old Republic International 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.
Check out your portfolio center.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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