Correlation Between Host Hotels and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Zurich Insurance 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 Host Hotels and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Host Hotels Resorts and Zurich Insurance Group, you can compare the effects of market volatilities on Host Hotels and Zurich Insurance 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 Host Hotels with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Zurich Insurance.
Diversification Opportunities for Host Hotels and Zurich Insurance
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Host and Zurich is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Host Hotels 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 Host Hotels Resorts are associated (or correlated) with Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of Host Hotels i.e., Host Hotels and Zurich Insurance go up and down completely randomly.
Pair Corralation between Host Hotels and Zurich Insurance
Assuming the 90 days trading horizon Host Hotels is expected to generate 1.22 times less return on investment than Zurich Insurance. In addition to that, Host Hotels is 1.77 times more volatile than Zurich Insurance Group. It trades about 0.14 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.31 per unit of volatility. If you would invest 52,390 in Zurich Insurance Group on September 12, 2024 and sell it today you would earn a total of 2,870 from holding Zurich Insurance Group or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Host Hotels Resorts vs. Zurich Insurance Group
Performance |
| Timeline |
| Host Hotels Resorts |
| Zurich Insurance |
Host Hotels and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Zurich Insurance
The main advantage of trading using opposite Host Hotels and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance's long position.| Host Hotels vs. Hong Kong Land | Host Hotels vs. Neometals | Host Hotels vs. Coor Service Management | Host Hotels vs. Fidelity Sustainable USD |
| Zurich Insurance vs. Neometals | Zurich Insurance vs. Coor Service Management | Zurich Insurance vs. Fidelity Sustainable USD | Zurich Insurance vs. Surgical Science Sweden |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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