Correlation Between Zurich Insurance and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Alfa Financial 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 Alfa Financial 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 Alfa Financial Software, you can compare the effects of market volatilities on Zurich Insurance and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Alfa Financial.
Diversification Opportunities for Zurich Insurance and Alfa Financial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zurich and Alfa is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Alfa Financial go up and down completely randomly.
Pair Corralation between Zurich Insurance and Alfa Financial
Assuming the 90 days trading horizon Zurich Insurance is expected to generate 1.12 times less return on investment than Alfa Financial. But when comparing it to its historical volatility, Zurich Insurance Group is 1.47 times less risky than Alfa Financial. It trades about 0.06 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 161.00 in Alfa Financial Software on October 16, 2024 and sell it today you would earn a total of 71.00 from holding Alfa Financial Software or generate 44.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Alfa Financial Software
Performance |
| Timeline |
| Zurich Insurance |
| Alfa Financial Software |
Zurich Insurance and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Alfa Financial
The main advantage of trading using opposite Zurich Insurance and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| Zurich Insurance vs. STMICROELECTRONICS | Zurich Insurance vs. Goosehead Insurance | Zurich Insurance vs. STMicroelectronics NV | Zurich Insurance vs. REVO INSURANCE SPA |
| Alfa Financial vs. Zurich Insurance Group | Alfa Financial vs. REVO INSURANCE SPA | Alfa Financial vs. BE Semiconductor Industries | Alfa Financial vs. AM EAGLE OUTFITTERS |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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