Correlation Between PANDORA and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both PANDORA and Zurich Insurance 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 PANDORA and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PANDORA and Zurich Insurance Group, you can compare the effects of market volatilities on PANDORA and Zurich Insurance 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 PANDORA with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PANDORA and Zurich Insurance.
Diversification Opportunities for PANDORA and Zurich Insurance
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PANDORA and Zurich is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PANDORA and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and PANDORA 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 PANDORA are associated (or correlated) with Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of PANDORA i.e., PANDORA and Zurich Insurance go up and down completely randomly.
Pair Corralation between PANDORA and Zurich Insurance
Assuming the 90 days trading horizon PANDORA is expected to generate 1.24 times more return on investment than Zurich Insurance. However, PANDORA is 1.24 times more volatile than Zurich Insurance Group. It trades about 0.12 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.06 per unit of risk. If you would invest 5,141 in PANDORA on September 1, 2024 and sell it today you would earn a total of 9,839 from holding PANDORA or generate 191.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
PANDORA vs. Zurich Insurance Group
Performance |
| Timeline |
| PANDORA |
| Zurich Insurance |
PANDORA and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PANDORA and Zurich Insurance
The main advantage of trading using opposite PANDORA and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PANDORA position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance's long position.| PANDORA vs. Zurich Insurance Group | PANDORA vs. REVO INSURANCE SPA | PANDORA vs. ADRIATIC METALS LS 013355 | PANDORA vs. Jacquet Metal Service |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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