Correlation Between Zurich Insurance and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Lindsell Train 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 Lindsell Train 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 Lindsell Train Investment, you can compare the effects of market volatilities on Zurich Insurance and Lindsell Train 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 Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Lindsell Train.
Diversification Opportunities for Zurich Insurance and Lindsell Train
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zurich and Lindsell is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train Investment 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 Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Lindsell Train go up and down completely randomly.
Pair Corralation between Zurich Insurance and Lindsell Train
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.66 times more return on investment than Lindsell Train. However, Zurich Insurance Group is 1.51 times less risky than Lindsell Train. It trades about 0.05 of its potential returns per unit of risk. Lindsell Train Investment is currently generating about -0.03 per unit of risk. If you would invest 44,485 in Zurich Insurance Group on October 11, 2024 and sell it today you would earn a total of 10,275 from holding Zurich Insurance Group or generate 23.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Zurich Insurance Group vs. Lindsell Train Investment
Performance |
| Timeline |
| Zurich Insurance |
| Lindsell Train Investment |
Zurich Insurance and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Lindsell Train
The main advantage of trading using opposite Zurich Insurance and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Lindsell Train 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 Lindsell Train will offset losses from the drop in Lindsell Train's long position.| Zurich Insurance vs. Lindsell Train Investment | Zurich Insurance vs. Intermediate Capital Group | Zurich Insurance vs. Broadridge Financial Solutions | Zurich Insurance vs. Everyman Media Group |
| Lindsell Train vs. Zegona Communications Plc | Lindsell Train vs. Cizzle Biotechnology Holdings | Lindsell Train vs. Allianz Technology Trust | Lindsell Train vs. Cognizant Technology Solutions |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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