Correlation Between TFS FINANCIAL and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both TFS 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 TFS 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 TFS FINANCIAL and Zurich Insurance Group, you can compare the effects of market volatilities on TFS 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 TFS FINANCIAL with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS FINANCIAL and Zurich Insurance.
Diversification Opportunities for TFS FINANCIAL and Zurich Insurance
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TFS and Zurich is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding TFS 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 TFS 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 TFS 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 TFS FINANCIAL i.e., TFS FINANCIAL and Zurich Insurance go up and down completely randomly.
Pair Corralation between TFS FINANCIAL and Zurich Insurance
Assuming the 90 days trading horizon TFS FINANCIAL is expected to generate 1.94 times less return on investment than Zurich Insurance. In addition to that, TFS FINANCIAL is 1.02 times more volatile than Zurich Insurance Group. It trades about 0.03 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.06 per unit of volatility. If you would invest 1,994 in Zurich Insurance Group on September 3, 2024 and sell it today you would earn a total of 1,026 from holding Zurich Insurance Group or generate 51.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFS FINANCIAL vs. Zurich Insurance Group
Performance |
| Timeline |
| TFS FINANCIAL |
| Zurich Insurance |
TFS FINANCIAL and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFS FINANCIAL and Zurich Insurance
The main advantage of trading using opposite TFS FINANCIAL and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS 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.| TFS FINANCIAL vs. Gladstone Investment | TFS FINANCIAL vs. Infrastrutture Wireless Italiane | TFS FINANCIAL vs. WillScot Mobile Mini | TFS FINANCIAL vs. HK Electric Investments |
| Zurich Insurance vs. Berkshire Hathaway | Zurich Insurance vs. Berkshire Hathaway | Zurich Insurance vs. Superior Plus Corp | Zurich Insurance vs. NMI Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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