Correlation Between Zurich Insurance and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Fortune Brands 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 Zurich Insurance and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zurich Insurance Group and Fortune Brands Home, you can compare the effects of market volatilities on Zurich Insurance and Fortune Brands 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 Zurich Insurance with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Fortune Brands.
Diversification Opportunities for Zurich Insurance and Fortune Brands
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zurich and Fortune is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and Zurich Insurance 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 Zurich Insurance Group are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Fortune Brands go up and down completely randomly.
Pair Corralation between Zurich Insurance and Fortune Brands
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.42 times more return on investment than Fortune Brands. However, Zurich Insurance Group is 2.38 times less risky than Fortune Brands. It trades about 0.2 of its potential returns per unit of risk. Fortune Brands Home is currently generating about -0.01 per unit of risk. If you would invest 50,285 in Zurich Insurance Group on September 12, 2024 and sell it today you would earn a total of 4,975 from holding Zurich Insurance Group or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 87.5% |
| Values | Daily Returns |
Zurich Insurance Group vs. Fortune Brands Home
Performance |
| Timeline |
| Zurich Insurance |
| Fortune Brands Home |
Zurich Insurance and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Fortune Brands
The main advantage of trading using opposite Zurich Insurance and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Zurich Insurance vs. Neometals | Zurich Insurance vs. Coor Service Management | Zurich Insurance vs. Fidelity Sustainable USD | Zurich Insurance vs. Surgical Science Sweden |
| Fortune Brands vs. METALL ZUG AG | Fortune Brands vs. Endeavour Mining Corp | Fortune Brands vs. Raytheon Technologies Corp | Fortune Brands vs. Hochschild Mining plc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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