Correlation Between Zurich Insurance and New Residential
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and New Residential 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 New Residential 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 New Residential Investment, you can compare the effects of market volatilities on Zurich Insurance and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and New Residential.
Diversification Opportunities for Zurich Insurance and New Residential
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zurich and New is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and New Residential go up and down completely randomly.
Pair Corralation between Zurich Insurance and New Residential
Assuming the 90 days trading horizon Zurich Insurance is expected to generate 1.58 times less return on investment than New Residential. But when comparing it to its historical volatility, Zurich Insurance Group is 1.33 times less risky than New Residential. It trades about 0.22 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,083 in New Residential Investment on November 1, 2024 and sell it today you would earn a total of 77.00 from holding New Residential Investment or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. New Residential Investment
Performance |
| Timeline |
| Zurich Insurance |
| New Residential Inve |
Zurich Insurance and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and New Residential
The main advantage of trading using opposite Zurich Insurance and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Zurich Insurance vs. Lindsell Train Investment | Zurich Insurance vs. Norman Broadbent Plc | Zurich Insurance vs. GoldMining | Zurich Insurance vs. Litigation Capital Management |
| New Residential vs. UNIQA Insurance Group | New Residential vs. Global Net Lease | New Residential vs. Zurich Insurance Group | New Residential vs. Futura Medical |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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