Correlation Between IA Financial and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both IA Financial 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 IA Financial and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iA Financial and Zurich Insurance Group, you can compare the effects of market volatilities on IA Financial 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 IA Financial with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Zurich Insurance.
Diversification Opportunities for IA Financial and Zurich Insurance
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IAFNF and Zurich is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and IA Financial 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 iA Financial 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 IA Financial i.e., IA Financial and Zurich Insurance go up and down completely randomly.
Pair Corralation between IA Financial and Zurich Insurance
Assuming the 90 days horizon IA Financial is expected to generate 1.65 times less return on investment than Zurich Insurance. But when comparing it to its historical volatility, iA Financial is 3.74 times less risky than Zurich Insurance. It trades about 0.08 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,154 in Zurich Insurance Group on September 2, 2024 and sell it today you would earn a total of 1,018 from holding Zurich Insurance Group or generate 47.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iA Financial vs. Zurich Insurance Group
Performance |
| Timeline |
| iA Financial |
| Zurich Insurance |
IA Financial and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Financial and Zurich Insurance
The main advantage of trading using opposite IA Financial and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial 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.| IA Financial vs. ageas SANV | IA Financial vs. Athene Holding | IA Financial vs. Sampo OYJ | IA Financial vs. Athene Holding |
| Zurich Insurance vs. ageas SANV | Zurich Insurance vs. Athene Holding | Zurich Insurance vs. Sampo OYJ | Zurich Insurance vs. Athene Holding |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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