Correlation Between LOREAL ADR and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both LOREAL ADR 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 LOREAL ADR and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOREAL ADR 15EO and Zurich Insurance Group, you can compare the effects of market volatilities on LOREAL ADR 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 LOREAL ADR with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOREAL ADR and Zurich Insurance.
Diversification Opportunities for LOREAL ADR and Zurich Insurance
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LOREAL and Zurich is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding LOREAL ADR 15EO and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and LOREAL ADR 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 LOREAL ADR 15EO 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 LOREAL ADR i.e., LOREAL ADR and Zurich Insurance go up and down completely randomly.
Pair Corralation between LOREAL ADR and Zurich Insurance
Assuming the 90 days trading horizon LOREAL ADR 15EO is expected to under-perform the Zurich Insurance. But the stock apears to be less risky and, when comparing its historical volatility, LOREAL ADR 15EO is 1.39 times less risky than Zurich Insurance. The stock trades about -0.02 of its potential returns per unit of risk. The Zurich Insurance Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,740 in Zurich Insurance Group on September 13, 2024 and sell it today you would earn a total of 280.00 from holding Zurich Insurance Group or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOREAL ADR 15EO vs. Zurich Insurance Group
Performance |
| Timeline |
| LOREAL ADR 15EO |
| Zurich Insurance |
LOREAL ADR and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOREAL ADR and Zurich Insurance
The main advantage of trading using opposite LOREAL ADR and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOREAL ADR 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.| LOREAL ADR vs. Dave Busters Entertainment | LOREAL ADR vs. TOWNSQUARE MEDIA INC | LOREAL ADR vs. PT Global Mediacom | LOREAL ADR vs. Lendlease Group |
| Zurich Insurance vs. Superior Plus Corp | Zurich Insurance vs. SIVERS SEMICONDUCTORS AB | Zurich Insurance vs. CHINA HUARONG ENERHD 50 | Zurich Insurance vs. NORDIC HALIBUT AS |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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