Correlation Between Canadian Utilities and ZURICH INSURANCE
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities 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 Canadian Utilities and ZURICH INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and ZURICH INSURANCE GROUP, you can compare the effects of market volatilities on Canadian Utilities 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 Canadian Utilities with a short position of ZURICH INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and ZURICH INSURANCE.
Diversification Opportunities for Canadian Utilities and ZURICH INSURANCE
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and ZURICH is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and ZURICH INSURANCE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZURICH INSURANCE and Canadian Utilities 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 Canadian Utilities Limited 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 Canadian Utilities i.e., Canadian Utilities and ZURICH INSURANCE go up and down completely randomly.
Pair Corralation between Canadian Utilities and ZURICH INSURANCE
Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the ZURICH INSURANCE. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 1.4 times less risky than ZURICH INSURANCE. The stock trades about -0.14 of its potential returns per unit of risk. The ZURICH INSURANCE GROUP is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 2,880 in ZURICH INSURANCE GROUP on October 18, 2024 and sell it today you would lose (60.00) from holding ZURICH INSURANCE GROUP or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. ZURICH INSURANCE GROUP
Performance |
| Timeline |
| Canadian Utilities |
| ZURICH INSURANCE |
Canadian Utilities and ZURICH INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and ZURICH INSURANCE
The main advantage of trading using opposite Canadian Utilities and ZURICH INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities 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.| Canadian Utilities vs. Scottish Mortgage Investment | Canadian Utilities vs. SLR Investment Corp | Canadian Utilities vs. American Eagle Outfitters | Canadian Utilities vs. HK Electric Investments |
| ZURICH INSURANCE vs. INDOFOOD AGRI RES | ZURICH INSURANCE vs. Canadian Utilities Limited | ZURICH INSURANCE vs. Sunny Optical Technology | ZURICH INSURANCE vs. X FAB Silicon Foundries |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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