Correlation Between Zurich Insurance and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Dairy Farm 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 Dairy Farm 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 Dairy Farm International, you can compare the effects of market volatilities on Zurich Insurance and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Dairy Farm.
Diversification Opportunities for Zurich Insurance and Dairy Farm
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zurich and Dairy is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Dairy Farm go up and down completely randomly.
Pair Corralation between Zurich Insurance and Dairy Farm
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.62 times more return on investment than Dairy Farm. However, Zurich Insurance Group is 1.6 times less risky than Dairy Farm. It trades about 0.05 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.0 per unit of risk. If you would invest 1,994 in Zurich Insurance Group on September 19, 2024 and sell it today you would earn a total of 906.00 from holding Zurich Insurance Group or generate 45.44% 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. Dairy Farm International
Performance |
| Timeline |
| Zurich Insurance |
| Dairy Farm International |
Zurich Insurance and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Dairy Farm
The main advantage of trading using opposite Zurich Insurance and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's 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 |
| Dairy Farm vs. Loblaw Companies Limited | Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. SIVERS SEMICONDUCTORS AB | Dairy Farm vs. Norsk Hydro ASA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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