Correlation Between Zurich Insurance and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Monks 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 Monks 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 Monks Investment Trust, you can compare the effects of market volatilities on Zurich Insurance and Monks 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Monks Investment.
Diversification Opportunities for Zurich Insurance and Monks Investment
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zurich and Monks is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Monks Investment go up and down completely randomly.
Pair Corralation between Zurich Insurance and Monks Investment
Assuming the 90 days trading horizon Zurich Insurance is expected to generate 1.2 times less return on investment than Monks Investment. But when comparing it to its historical volatility, Zurich Insurance Group is 1.08 times less risky than Monks Investment. It trades about 0.05 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 99,994 in Monks Investment Trust on August 26, 2024 and sell it today you would earn a total of 26,406 from holding Monks Investment Trust or generate 26.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Zurich Insurance Group vs. Monks Investment Trust
Performance |
| Timeline |
| Zurich Insurance |
| Monks Investment Trust |
Zurich Insurance and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Monks Investment
The main advantage of trading using opposite Zurich Insurance and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Monks 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 Monks Investment will offset losses from the drop in Monks Investment's long position.| Zurich Insurance vs. JD Sports Fashion | Zurich Insurance vs. Schweiter Technologies AG | Zurich Insurance vs. Made Tech Group | Zurich Insurance vs. PureTech Health plc |
| Monks Investment vs. Catalyst Media Group | Monks Investment vs. Oncimmune Holdings plc | Monks Investment vs. Invesco Health Care | Monks 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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