Correlation Between Givaudan and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Givaudan 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 Givaudan and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Zurich Insurance Group, you can compare the effects of market volatilities on Givaudan 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 Givaudan with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Zurich Insurance.
Diversification Opportunities for Givaudan and Zurich Insurance
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Givaudan and Zurich is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Givaudan 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 Givaudan SA 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 Givaudan i.e., Givaudan and Zurich Insurance go up and down completely randomly.
Pair Corralation between Givaudan and Zurich Insurance
Assuming the 90 days trading horizon Givaudan is expected to generate 2.29 times less return on investment than Zurich Insurance. In addition to that, Givaudan is 1.06 times more volatile than Zurich Insurance Group. It trades about 0.08 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.21 per unit of volatility. If you would invest 52,380 in Zurich Insurance Group on September 12, 2024 and sell it today you would earn a total of 2,420 from holding Zurich Insurance Group or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Givaudan SA vs. Zurich Insurance Group
Performance |
| Timeline |
| Givaudan SA |
| Zurich Insurance |
Givaudan and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Zurich Insurance
The main advantage of trading using opposite Givaudan and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan 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 Givaudan SA 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. Swiss Re AG | Zurich Insurance vs. Swisscom AG | Zurich Insurance vs. Lonza Group AG | Zurich Insurance vs. Novartis 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |