Correlation Between GOODYEAR T and Zurich Insurance

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Can any of the company-specific risk be diversified away by investing in both GOODYEAR T 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 GOODYEAR T and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODYEAR T RUBBER and Zurich Insurance Group, you can compare the effects of market volatilities on GOODYEAR T 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 GOODYEAR T with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and Zurich Insurance.

Diversification Opportunities for GOODYEAR T and Zurich Insurance

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between GOODYEAR and Zurich is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and GOODYEAR T 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 GOODYEAR T RUBBER 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 GOODYEAR T i.e., GOODYEAR T and Zurich Insurance go up and down completely randomly.

Pair Corralation between GOODYEAR T and Zurich Insurance

Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to under-perform the Zurich Insurance. In addition to that, GOODYEAR T is 1.78 times more volatile than Zurich Insurance Group. It trades about -0.25 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.01 per unit of volatility. If you would invest  2,900  in Zurich Insurance Group on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Zurich Insurance Group or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

GOODYEAR T RUBBER  vs.  Zurich Insurance Group

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 010203040
JavaScript chart by amCharts 3.21.15GTR ZFI1
       Timeline  
GOODYEAR T RUBBER 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in GOODYEAR T RUBBER are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GOODYEAR T may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec7.588.599.51010.5
Zurich Insurance 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Zurich Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec26.52727.52828.52929.53030.5

GOODYEAR T and Zurich Insurance Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.78-7.33-4.87-2.410.04092.465.07.5510.0912.63 0.020.040.060.08
JavaScript chart by amCharts 3.21.15GTR ZFI1
       Returns  

Pair Trading with GOODYEAR T and Zurich Insurance

The main advantage of trading using opposite GOODYEAR T and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T 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 GOODYEAR T RUBBER 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.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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