Correlation Between Zurich Insurance and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Premier Foods 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 Premier Foods 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 Premier Foods PLC, you can compare the effects of market volatilities on Zurich Insurance and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Premier Foods.
Diversification Opportunities for Zurich Insurance and Premier Foods
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zurich and Premier is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Premier Foods go up and down completely randomly.
Pair Corralation between Zurich Insurance and Premier Foods
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 1.17 times more return on investment than Premier Foods. However, Zurich Insurance is 1.17 times more volatile than Premier Foods PLC. It trades about 0.28 of its potential returns per unit of risk. Premier Foods PLC is currently generating about 0.06 per unit of risk. If you would invest 54,760 in Zurich Insurance Group on November 28, 2024 and sell it today you would earn a total of 3,940 from holding Zurich Insurance Group or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Premier Foods PLC
Performance |
| Timeline |
| Zurich Insurance |
| Premier Foods PLC |
Zurich Insurance and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Premier Foods
The main advantage of trading using opposite Zurich Insurance and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Zurich Insurance vs. Tatton Asset Management | Zurich Insurance vs. Fevertree Drinks Plc | Zurich Insurance vs. InterContinental Hotels Group | Zurich Insurance vs. Host Hotels Resorts |
| Premier Foods vs. Porvair plc | Premier Foods vs. Alfa Financial Software | Premier Foods vs. Bytes Technology | Premier Foods vs. Tata Steel Limited |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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