Correlation Between Japan Post and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Japan Post 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 Japan Post and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Insurance and Zurich Insurance Group, you can compare the effects of market volatilities on Japan Post 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 Japan Post with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Zurich Insurance.
Diversification Opportunities for Japan Post and Zurich Insurance
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Zurich is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Japan Post 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 Japan Post Insurance 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 Japan Post i.e., Japan Post and Zurich Insurance go up and down completely randomly.
Pair Corralation between Japan Post and Zurich Insurance
Assuming the 90 days trading horizon Japan Post Insurance is expected to generate 1.24 times more return on investment than Zurich Insurance. However, Japan Post is 1.24 times more volatile than Zurich Insurance Group. It trades about 0.53 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.23 per unit of risk. If you would invest 1,500 in Japan Post Insurance on September 1, 2024 and sell it today you would earn a total of 460.00 from holding Japan Post Insurance or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Post Insurance vs. Zurich Insurance Group
Performance |
| Timeline |
| Japan Post Insurance |
| Zurich Insurance |
Japan Post and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Zurich Insurance
The main advantage of trading using opposite Japan Post and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post 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.| Japan Post vs. Algonquin Power Utilities | Japan Post vs. Goodyear Tire Rubber | Japan Post vs. Caseys General Stores | Japan Post vs. Materialise NV |
| Zurich Insurance vs. Ribbon Communications | Zurich Insurance vs. Rogers Communications | Zurich Insurance vs. Cogent Communications Holdings | Zurich Insurance vs. Autohome ADR |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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