Correlation Between Zurich Insurance and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Summit Materials 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 Zurich Insurance and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zurich Insurance Group and Summit Materials, you can compare the effects of market volatilities on Zurich Insurance and Summit Materials 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 Zurich Insurance with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Summit Materials.
Diversification Opportunities for Zurich Insurance and Summit Materials
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zurich and Summit is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Zurich Insurance 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 Zurich Insurance Group are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Summit Materials go up and down completely randomly.
Pair Corralation between Zurich Insurance and Summit Materials
Assuming the 90 days trading horizon Zurich Insurance is expected to generate 1.17 times less return on investment than Summit Materials. But when comparing it to its historical volatility, Zurich Insurance Group is 1.26 times less risky than Summit Materials. It trades about 0.07 of its potential returns per unit of risk. Summit Materials is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,500 in Summit Materials on September 20, 2024 and sell it today you would earn a total of 1,320 from holding Summit Materials or generate 37.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Summit Materials
Performance |
| Timeline |
| Zurich Insurance |
| Summit Materials |
Zurich Insurance and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Summit Materials
The main advantage of trading using opposite Zurich Insurance and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| 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 |
| Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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