Correlation Between Lonza Group and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Lonza Group 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 Lonza Group and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonza Group AG and Zurich Insurance Group, you can compare the effects of market volatilities on Lonza Group 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 Lonza Group with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and Zurich Insurance.
Diversification Opportunities for Lonza Group and Zurich Insurance
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lonza and Zurich is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Lonza Group 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 Lonza Group AG 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 Lonza Group i.e., Lonza Group and Zurich Insurance go up and down completely randomly.
Pair Corralation between Lonza Group and Zurich Insurance
Assuming the 90 days trading horizon Lonza Group AG is expected to under-perform the Zurich Insurance. In addition to that, Lonza Group is 2.02 times more volatile than Zurich Insurance Group. It trades about -0.13 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.28 per unit of volatility. If you would invest 51,880 in Zurich Insurance Group on August 26, 2024 and sell it today you would earn a total of 3,420 from holding Zurich Insurance Group or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lonza Group AG vs. Zurich Insurance Group
Performance |
| Timeline |
| Lonza Group AG |
| Zurich Insurance |
Lonza Group and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza Group and Zurich Insurance
The main advantage of trading using opposite Lonza Group and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group 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.| Lonza Group vs. Sika AG | Lonza Group vs. Givaudan SA | Lonza Group vs. Geberit AG | Lonza Group vs. Swiss Life Holding |
| Zurich Insurance vs. Swiss Re AG | Zurich Insurance vs. Novartis AG | Zurich Insurance vs. Swiss Life Holding | Zurich Insurance vs. UBS Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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