Correlation Between BRIT AMER and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both BRIT AMER 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 BRIT AMER and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and Zurich Insurance Group, you can compare the effects of market volatilities on BRIT AMER 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 BRIT AMER with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Zurich Insurance.
Diversification Opportunities for BRIT AMER and Zurich Insurance
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BRIT and Zurich is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and BRIT AMER 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 BRIT AMER TOBACCO 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 BRIT AMER i.e., BRIT AMER and Zurich Insurance go up and down completely randomly.
Pair Corralation between BRIT AMER and Zurich Insurance
Assuming the 90 days trading horizon BRIT AMER is expected to generate 2.83 times less return on investment than Zurich Insurance. But when comparing it to its historical volatility, BRIT AMER TOBACCO is 1.75 times less risky than Zurich Insurance. It trades about 0.02 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,880 in Zurich Insurance Group on September 19, 2024 and sell it today you would earn a total of 20.00 from holding Zurich Insurance Group or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. Zurich Insurance Group
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Zurich Insurance |
BRIT AMER and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Zurich Insurance
The main advantage of trading using opposite BRIT AMER and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER 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.| BRIT AMER vs. SEI INVESTMENTS | BRIT AMER vs. ALTAIR RES INC | BRIT AMER vs. MYFAIR GOLD P | BRIT AMER vs. SOGECLAIR SA INH |
| Zurich Insurance vs. Superior Plus Corp | Zurich Insurance vs. SIVERS SEMICONDUCTORS AB | Zurich Insurance vs. CHINA HUARONG ENERHD 50 | Zurich Insurance vs. NORDIC HALIBUT AS |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |