Correlation Between Reinsurance Group and Assurant

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

Diversification Opportunities for Reinsurance Group and Assurant

0.78

Correlation Coefficient

Reinsurance Group  Assurant

Poor diversification

The 3 months correlation between Reinsurance and Assurant is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Assurant go up and down completely randomly.

Pair Corralation between Reinsurance Group and Assurant

Considering the 90-day investment horizon Reinsurance Group is expected to generate 8.31 times less return on investment than Assurant. But when comparing it to its historical volatility, Reinsurance Group of is 4.43 times less risky than Assurant. It trades about 0.02 of its potential returns per unit of risk. Assurant is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,962  in Assurant on March 7, 2025 and sell it today you would earn a total of  18.00  from holding Assurant or generate 0.92% return on investment over 90 days.

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

Reinsurance Group of  vs.  Assurant

Reinsurance Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reinsurance Group of are ranked lower than 4 (%) 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.

Assurant

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Assurant is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Reinsurance Group and Assurant

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

The idea behind Reinsurance Group of and Assurant 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.