Correlation Between Zurich Insurance and Henderson High
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Henderson High 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 Henderson High 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 Henderson High Income, you can compare the effects of market volatilities on Zurich Insurance and Henderson High 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 Henderson High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Henderson High.
Diversification Opportunities for Zurich Insurance and Henderson High
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zurich and Henderson is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Henderson High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson High Income 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 Henderson High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson High Income has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Henderson High go up and down completely randomly.
Pair Corralation between Zurich Insurance and Henderson High
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.9 times more return on investment than Henderson High. However, Zurich Insurance Group is 1.11 times less risky than Henderson High. It trades about 0.08 of its potential returns per unit of risk. Henderson High Income is currently generating about 0.03 per unit of risk. If you would invest 42,005 in Zurich Insurance Group on December 11, 2024 and sell it today you would earn a total of 18,135 from holding Zurich Insurance Group or generate 43.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
Zurich Insurance Group vs. Henderson High Income
Performance |
| Timeline |
| Zurich Insurance |
| Henderson High Income |
Zurich Insurance and Henderson High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Henderson High
The main advantage of trading using opposite Zurich Insurance and Henderson High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Henderson High 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 Henderson High will offset losses from the drop in Henderson High's long position.| Zurich Insurance vs. Zegona Communications Plc | ||
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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