Correlation Between Zurich Insurance and Erste Group
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Erste Group 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 Erste Group 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 Erste Group Bank, you can compare the effects of market volatilities on Zurich Insurance and Erste Group 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Erste Group.
Diversification Opportunities for Zurich Insurance and Erste Group
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zurich and Erste is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Erste Group go up and down completely randomly.
Pair Corralation between Zurich Insurance and Erste Group
Assuming the 90 days trading horizon Zurich Insurance Group is expected to under-perform the Erste Group. But the stock apears to be less risky and, when comparing its historical volatility, Zurich Insurance Group is 1.27 times less risky than Erste Group. The stock trades about -0.01 of its potential returns per unit of risk. The Erste Group Bank is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 5,884 in Erste Group Bank on October 25, 2024 and sell it today you would earn a total of 306.00 from holding Erste Group Bank or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Erste Group Bank
Performance |
| Timeline |
| Zurich Insurance |
| Erste Group Bank |
Zurich Insurance and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Erste Group
The main advantage of trading using opposite Zurich Insurance and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.| Zurich Insurance vs. Xeros Technology Group | Zurich Insurance vs. LPKF Laser Electronics | Zurich Insurance vs. Take Two Interactive Software | Zurich Insurance vs. Creo Medical Group |
| Erste Group vs. Manulife Financial Corp | Erste Group vs. Atalaya Mining | Erste Group vs. Bisichi Mining PLC | Erste Group vs. St Galler Kantonalbank |
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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