Correlation Between Zurich Insurance and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Park Hotels 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 Park Hotels 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 Park Hotels Resorts, you can compare the effects of market volatilities on Zurich Insurance and Park Hotels 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 Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Park Hotels.
Diversification Opportunities for Zurich Insurance and Park Hotels
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zurich and Park is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Park Hotels go up and down completely randomly.
Pair Corralation between Zurich Insurance and Park Hotels
Assuming the 90 days trading horizon Zurich Insurance is expected to generate 1.37 times less return on investment than Park Hotels. But when comparing it to its historical volatility, Zurich Insurance Group is 3.14 times less risky than Park Hotels. It trades about 0.08 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,251 in Park Hotels Resorts on August 31, 2024 and sell it today you would earn a total of 309.00 from holding Park Hotels Resorts or generate 24.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.67% |
| Values | Daily Returns |
Zurich Insurance Group vs. Park Hotels Resorts
Performance |
| Timeline |
| Zurich Insurance |
| Park Hotels Resorts |
Zurich Insurance and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Park Hotels
The main advantage of trading using opposite Zurich Insurance and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Park Hotels 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| Zurich Insurance vs. Roper Technologies | Zurich Insurance vs. Monster Beverage Corp | Zurich Insurance vs. Uber Technologies | Zurich Insurance vs. AfriTin Mining |
| Park Hotels vs. Neometals | Park Hotels vs. Coor Service Management | Park Hotels vs. Aeorema Communications Plc | Park Hotels vs. JLEN Environmental Assets |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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