Correlation Between Zurich Insurance and Ashtead Group

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Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Ashtead 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 Ashtead 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 Ashtead Group PLC, you can compare the effects of market volatilities on Zurich Insurance and Ashtead 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 Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Ashtead Group.

Diversification Opportunities for Zurich Insurance and Ashtead Group

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Zurich and Ashtead is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Ashtead Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group PLC 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 Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group PLC has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Ashtead Group go up and down completely randomly.

Pair Corralation between Zurich Insurance and Ashtead Group

Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.22 times more return on investment than Ashtead Group. However, Zurich Insurance Group is 4.54 times less risky than Ashtead Group. It trades about -0.24 of its potential returns per unit of risk. Ashtead Group PLC is currently generating about -0.39 per unit of risk. If you would invest  56,080  in Zurich Insurance Group on October 7, 2024 and sell it today you would lose (1,870) from holding Zurich Insurance Group or give up 3.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Zurich Insurance Group  vs.  Ashtead Group PLC

 Performance 
       Timeline  
Zurich Insurance 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Ashtead Group PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ashtead Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Zurich Insurance and Ashtead Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zurich Insurance and Ashtead Group

The main advantage of trading using opposite Zurich Insurance and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Ashtead 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.
The idea behind Zurich Insurance Group and Ashtead Group PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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