Correlation Between Erste Group and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Erste Group 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 Erste Group and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and Zurich Insurance Group, you can compare the effects of market volatilities on Erste Group 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 Erste Group with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Zurich Insurance.
Diversification Opportunities for Erste Group and Zurich Insurance
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erste and Zurich is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Erste 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 Erste Group Bank 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 Erste Group i.e., Erste Group and Zurich Insurance go up and down completely randomly.
Pair Corralation between Erste Group and Zurich Insurance
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 1.76 times more return on investment than Zurich Insurance. However, Erste Group is 1.76 times more volatile than Zurich Insurance Group. It trades about 0.33 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about -0.12 per unit of risk. If you would invest 5,580 in Erste Group Bank on October 12, 2024 and sell it today you would earn a total of 451.00 from holding Erste Group Bank or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Zurich Insurance Group
Performance |
| Timeline |
| Erste Group Bank |
| Zurich Insurance |
Erste Group and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Zurich Insurance
The main advantage of trading using opposite Erste Group and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group 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.| Erste Group vs. AMG Advanced Metallurgical | Erste Group vs. Lindsell Train Investment | Erste Group vs. Roadside Real Estate | Erste Group vs. Science in Sport |
| Zurich Insurance vs. Erste Group Bank | Zurich Insurance vs. Morgan Advanced Materials | Zurich Insurance vs. Raymond James Financial | Zurich Insurance vs. Sparebank 1 SR |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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