Correlation Between Liberty Media and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Liberty Media 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 Liberty Media and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media Corp and Zurich Insurance Group, you can compare the effects of market volatilities on Liberty Media 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 Liberty Media with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Zurich Insurance.
Diversification Opportunities for Liberty Media and Zurich Insurance
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Zurich is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media Corp and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Liberty Media 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 Liberty Media Corp 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 Liberty Media i.e., Liberty Media and Zurich Insurance go up and down completely randomly.
Pair Corralation between Liberty Media and Zurich Insurance
Assuming the 90 days trading horizon Liberty Media Corp is expected to under-perform the Zurich Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Media Corp is 1.04 times less risky than Zurich Insurance. The stock trades about -0.08 of its potential returns per unit of risk. The Zurich Insurance Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 53,880 in Zurich Insurance Group on October 27, 2024 and sell it today you would earn a total of 100.00 from holding Zurich Insurance Group or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Liberty Media Corp vs. Zurich Insurance Group
Performance |
| Timeline |
| Liberty Media Corp |
| Zurich Insurance |
Liberty Media and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Zurich Insurance
The main advantage of trading using opposite Liberty Media and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media 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.| Liberty Media vs. Jacquet Metal Service | Liberty Media vs. Batm Advanced Communications | Liberty Media vs. Charter Communications Cl | Liberty Media vs. CNH Industrial NV |
| Zurich Insurance vs. Gamma Communications PLC | Zurich Insurance vs. Norman Broadbent Plc | Zurich Insurance vs. Cairo Communication SpA | Zurich Insurance vs. Verizon Communications |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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