Correlation Between Universal Insurance and ZURICH INSURANCE
Can any of the company-specific risk be diversified away by investing in both Universal Insurance 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 Universal Insurance and ZURICH INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance Holdings and ZURICH INSURANCE GROUP, you can compare the effects of market volatilities on Universal Insurance 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 Universal Insurance with a short position of ZURICH INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and ZURICH INSURANCE.
Diversification Opportunities for Universal Insurance and ZURICH INSURANCE
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and ZURICH is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and ZURICH INSURANCE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZURICH INSURANCE and Universal 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 Universal Insurance Holdings 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 Universal Insurance i.e., Universal Insurance and ZURICH INSURANCE go up and down completely randomly.
Pair Corralation between Universal Insurance and ZURICH INSURANCE
Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the ZURICH INSURANCE. In addition to that, Universal Insurance is 1.31 times more volatile than ZURICH INSURANCE GROUP. It trades about -0.19 of its total potential returns per unit of risk. ZURICH INSURANCE GROUP is currently generating about 0.13 per unit of volatility. If you would invest 2,800 in ZURICH INSURANCE GROUP on November 3, 2024 and sell it today you would earn a total of 100.00 from holding ZURICH INSURANCE GROUP or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. ZURICH INSURANCE GROUP
Performance |
| Timeline |
| Universal Insurance |
| ZURICH INSURANCE |
Universal Insurance and ZURICH INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and ZURICH INSURANCE
The main advantage of trading using opposite Universal Insurance and ZURICH INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance 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.| Universal Insurance vs. TAL Education Group | Universal Insurance vs. STRAYER EDUCATION | Universal Insurance vs. NorAm Drilling AS | Universal Insurance vs. PULSION Medical Systems |
| ZURICH INSURANCE vs. China Communications Services | ZURICH INSURANCE vs. Minerals Technologies | ZURICH INSURANCE vs. Citic Telecom International | ZURICH INSURANCE vs. HUTCHISON TELECOMM |
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 Stocks Directory module to find actively traded stocks across global markets.
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