Correlation Between Arch Capital and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Arch Capital 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 Arch Capital and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arch Capital Group and Zurich Insurance Group, you can compare the effects of market volatilities on Arch Capital 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 Arch Capital with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Zurich Insurance.
Diversification Opportunities for Arch Capital and Zurich Insurance
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arch and Zurich is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Arch Capital 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 Arch Capital Group 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 Arch Capital i.e., Arch Capital and Zurich Insurance go up and down completely randomly.
Pair Corralation between Arch Capital and Zurich Insurance
Assuming the 90 days horizon Arch Capital is expected to generate 2.54 times less return on investment than Zurich Insurance. But when comparing it to its historical volatility, Arch Capital Group is 1.17 times less risky than Zurich Insurance. It trades about 0.05 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,390 in Zurich Insurance Group on September 3, 2024 and sell it today you would earn a total of 630.00 from holding Zurich Insurance Group or generate 26.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. Zurich Insurance Group
Performance |
| Timeline |
| Arch Capital Group |
| Zurich Insurance |
Arch Capital and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and Zurich Insurance
The main advantage of trading using opposite Arch Capital and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital 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.| Arch Capital vs. Berkshire Hathaway | Arch Capital vs. Berkshire Hathaway | Arch Capital vs. Superior Plus Corp | Arch Capital vs. NMI Holdings |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |