Correlation Between SCOTT TECHNOLOGY and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and Zurich Insurance Group, you can compare the effects of market volatilities on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and Zurich Insurance.
Diversification Opportunities for SCOTT TECHNOLOGY and Zurich Insurance
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SCOTT and Zurich is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Zurich Insurance go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and Zurich Insurance
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to under-perform the Zurich Insurance. But the stock apears to be less risky and, when comparing its historical volatility, SCOTT TECHNOLOGY is 1.05 times less risky than Zurich Insurance. The stock trades about -0.01 of its potential returns per unit of risk. The Zurich Insurance Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,940 in Zurich Insurance Group on November 7, 2024 and sell it today you would earn a total of 40.00 from holding Zurich Insurance Group or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOTT TECHNOLOGY vs. Zurich Insurance Group
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| Zurich Insurance |
SCOTT TECHNOLOGY and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and Zurich Insurance
The main advantage of trading using opposite SCOTT TECHNOLOGY and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY 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.| SCOTT TECHNOLOGY vs. MPH Health Care | SCOTT TECHNOLOGY vs. Garofalo Health Care | SCOTT TECHNOLOGY vs. US Physical Therapy | SCOTT TECHNOLOGY vs. Siemens Healthineers AG |
| Zurich Insurance vs. SPARTAN STORES | Zurich Insurance vs. FIREWEED METALS P | Zurich Insurance vs. SOLSTAD OFFSHORE NK | Zurich Insurance vs. COSTCO WHOLESALE CDR |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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