Correlation Between ARMADA HOFFLER and ZURICH INSURANCE
Can any of the company-specific risk be diversified away by investing in both ARMADA HOFFLER 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 ARMADA HOFFLER and ZURICH INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARMADA HOFFLER PR and ZURICH INSURANCE GROUP, you can compare the effects of market volatilities on ARMADA HOFFLER 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 ARMADA HOFFLER with a short position of ZURICH INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARMADA HOFFLER and ZURICH INSURANCE.
Diversification Opportunities for ARMADA HOFFLER and ZURICH INSURANCE
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARMADA and ZURICH is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ARMADA HOFFLER PR and ZURICH INSURANCE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZURICH INSURANCE and ARMADA HOFFLER 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 ARMADA HOFFLER PR 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 ARMADA HOFFLER i.e., ARMADA HOFFLER and ZURICH INSURANCE go up and down completely randomly.
Pair Corralation between ARMADA HOFFLER and ZURICH INSURANCE
Assuming the 90 days horizon ARMADA HOFFLER is expected to generate 5.35 times less return on investment than ZURICH INSURANCE. But when comparing it to its historical volatility, ARMADA HOFFLER PR is 1.02 times less risky than ZURICH INSURANCE. It trades about 0.05 of its potential returns per unit of risk. ZURICH INSURANCE GROUP is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,760 in ZURICH INSURANCE GROUP on September 16, 2024 and sell it today you would earn a total of 160.00 from holding ZURICH INSURANCE GROUP or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARMADA HOFFLER PR vs. ZURICH INSURANCE GROUP
Performance |
| Timeline |
| ARMADA HOFFLER PR |
| ZURICH INSURANCE |
ARMADA HOFFLER and ZURICH INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARMADA HOFFLER and ZURICH INSURANCE
The main advantage of trading using opposite ARMADA HOFFLER and ZURICH INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARMADA HOFFLER 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.| ARMADA HOFFLER vs. ZURICH INSURANCE GROUP | ARMADA HOFFLER vs. Goosehead Insurance | ARMADA HOFFLER vs. Ping An Insurance | ARMADA HOFFLER vs. Safety Insurance Group |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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