Correlation Between AECOM TECHNOLOGY and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY 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 AECOM TECHNOLOGY and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Zurich Insurance Group, you can compare the effects of market volatilities on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Zurich Insurance.
Diversification Opportunities for AECOM TECHNOLOGY and Zurich Insurance
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AECOM and Zurich is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Zurich Insurance go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Zurich Insurance
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.65 times more return on investment than Zurich Insurance. However, AECOM TECHNOLOGY is 1.53 times less risky than Zurich Insurance. It trades about 0.06 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.01 per unit of risk. If you would invest 10,174 in AECOM TECHNOLOGY on October 29, 2024 and sell it today you would earn a total of 126.00 from holding AECOM TECHNOLOGY or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Zurich Insurance Group
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Zurich Insurance |
AECOM TECHNOLOGY and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Zurich Insurance
The main advantage of trading using opposite AECOM TECHNOLOGY and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY 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.| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc |
| Zurich Insurance vs. Minerals Technologies | Zurich Insurance vs. Playtech plc | Zurich Insurance vs. SANOK RUBBER ZY | Zurich Insurance vs. Sumitomo Rubber Industries |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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