Correlation Between STMICROELECTRONICS and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS 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 STMICROELECTRONICS and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Zurich Insurance Group, you can compare the effects of market volatilities on STMICROELECTRONICS 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 STMICROELECTRONICS with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Zurich Insurance.
Diversification Opportunities for STMICROELECTRONICS and Zurich Insurance
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMICROELECTRONICS and Zurich is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS i.e., STMICROELECTRONICS and Zurich Insurance go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and Zurich Insurance
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the Zurich Insurance. In addition to that, STMICROELECTRONICS is 1.73 times more volatile than Zurich Insurance Group. It trades about -0.04 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.01 per unit of volatility. If you would invest 2,880 in Zurich Insurance Group on October 16, 2024 and sell it today you would earn a total of 0.00 from holding Zurich Insurance Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
STMICROELECTRONICS vs. Zurich Insurance Group
Performance |
| Timeline |
| STMICROELECTRONICS |
| Zurich Insurance |
STMICROELECTRONICS and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and Zurich Insurance
The main advantage of trading using opposite STMICROELECTRONICS and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS 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.| STMICROELECTRONICS vs. UPDATE SOFTWARE | STMICROELECTRONICS vs. Globex Mining Enterprises | STMICROELECTRONICS vs. SWISS WATER DECAFFCOFFEE | STMICROELECTRONICS vs. Harmony Gold Mining |
| Zurich Insurance vs. United Natural Foods | Zurich Insurance vs. EBRO FOODS | Zurich Insurance vs. 24SEVENOFFICE GROUP AB | Zurich Insurance vs. SENECA FOODS A |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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