Correlation Between Berner Kantonalbank and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Berner Kantonalbank 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 Berner Kantonalbank and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berner Kantonalbank AG and Zurich Insurance Group, you can compare the effects of market volatilities on Berner Kantonalbank 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 Berner Kantonalbank with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berner Kantonalbank and Zurich Insurance.
Diversification Opportunities for Berner Kantonalbank and Zurich Insurance
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berner and Zurich is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Berner Kantonalbank AG and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Berner Kantonalbank 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 Berner Kantonalbank AG 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 Berner Kantonalbank i.e., Berner Kantonalbank and Zurich Insurance go up and down completely randomly.
Pair Corralation between Berner Kantonalbank and Zurich Insurance
Assuming the 90 days trading horizon Berner Kantonalbank is expected to generate 13.53 times less return on investment than Zurich Insurance. But when comparing it to its historical volatility, Berner Kantonalbank AG is 2.17 times less risky than Zurich Insurance. It trades about 0.04 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 52,060 in Zurich Insurance Group on August 25, 2024 and sell it today you would earn a total of 3,240 from holding Zurich Insurance Group or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berner Kantonalbank AG vs. Zurich Insurance Group
Performance |
| Timeline |
| Berner Kantonalbank |
| Zurich Insurance |
Berner Kantonalbank and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berner Kantonalbank and Zurich Insurance
The main advantage of trading using opposite Berner Kantonalbank and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berner Kantonalbank 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.| Berner Kantonalbank vs. Swissquote Group Holding | Berner Kantonalbank vs. Banque Cantonale | Berner Kantonalbank vs. Barry Callebaut AG | Berner Kantonalbank vs. Vontobel Holding |
| Zurich Insurance vs. Swiss Re AG | Zurich Insurance vs. Novartis AG | Zurich Insurance vs. Swiss Life Holding | Zurich Insurance vs. UBS Group AG |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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