Correlation Between Ford and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Zurich Insurance Group, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Zurich Insurance.
Diversification Opportunities for Ford and Zurich Insurance
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Zurich is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Ford 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 Ford Motor 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 Ford i.e., Ford and Zurich Insurance go up and down completely randomly.
Pair Corralation between Ford and Zurich Insurance
Taking into account the 90-day investment horizon Ford is expected to generate 1.31 times less return on investment than Zurich Insurance. In addition to that, Ford is 2.73 times more volatile than Zurich Insurance Group. It trades about 0.04 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.15 per unit of volatility. If you would invest 3,027 in Zurich Insurance Group on August 28, 2024 and sell it today you would earn a total of 92.00 from holding Zurich Insurance Group or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Zurich Insurance Group
Performance |
| Timeline |
| Ford Motor |
| Zurich Insurance |
Ford and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Zurich Insurance
The main advantage of trading using opposite Ford and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Zurich Insurance Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Zurich Insurance vs. Assicurazioni Generali SpA | Zurich Insurance vs. ageas SANV | Zurich Insurance vs. AXA SA | Zurich Insurance vs. Sampo OYJ |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |