Correlation Between Zurich Insurance and Herald Investment
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Herald Investment 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 Herald Investment 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 Herald Investment Trust, you can compare the effects of market volatilities on Zurich Insurance and Herald Investment 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 Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Herald Investment.
Diversification Opportunities for Zurich Insurance and Herald Investment
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zurich and Herald is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust 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 Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Herald Investment go up and down completely randomly.
Pair Corralation between Zurich Insurance and Herald Investment
Assuming the 90 days trading horizon Zurich Insurance is expected to generate 1.0 times less return on investment than Herald Investment. But when comparing it to its historical volatility, Zurich Insurance Group is 1.21 times less risky than Herald Investment. It trades about 0.1 of its potential returns per unit of risk. Herald Investment Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 177,600 in Herald Investment Trust on August 29, 2024 and sell it today you would earn a total of 55,900 from holding Herald Investment Trust or generate 31.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.68% |
| Values | Daily Returns |
Zurich Insurance Group vs. Herald Investment Trust
Performance |
| Timeline |
| Zurich Insurance |
| Herald Investment Trust |
Zurich Insurance and Herald Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Herald Investment
The main advantage of trading using opposite Zurich Insurance and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Herald Investment 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 Herald Investment will offset losses from the drop in Herald Investment's long position.| Zurich Insurance vs. Neometals | Zurich Insurance vs. Coor Service Management | Zurich Insurance vs. Fidelity Sustainable USD | Zurich Insurance vs. Sancus Lending Group |
| Herald Investment vs. Toyota Motor Corp | Herald Investment vs. Lendinvest PLC | Herald Investment vs. Neometals | Herald Investment vs. Coor Service Management |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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