Correlation Between Zurich Insurance and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium, you can compare the effects of market volatilities on Zurich Insurance and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Plastic Omnium.
Diversification Opportunities for Zurich Insurance and Plastic Omnium
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zurich and Plastic is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Plastic Omnium go up and down completely randomly.
Pair Corralation between Zurich Insurance and Plastic Omnium
Assuming the 90 days trading horizon Zurich Insurance Group is expected to under-perform the Plastic Omnium. But the stock apears to be less risky and, when comparing its historical volatility, Zurich Insurance Group is 1.36 times less risky than Plastic Omnium. The stock trades about -0.01 of its potential returns per unit of risk. The Plastic Omnium is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 823.00 in Plastic Omnium on September 24, 2024 and sell it today you would earn a total of 142.00 from holding Plastic Omnium or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Zurich Insurance Group vs. Plastic Omnium
Performance |
| Timeline |
| Zurich Insurance |
| Plastic Omnium |
Zurich Insurance and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Plastic Omnium
The main advantage of trading using opposite Zurich Insurance and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| Zurich Insurance vs. Berkshire Hathaway | Zurich Insurance vs. Berkshire Hathaway | Zurich Insurance vs. American International Group | Zurich Insurance vs. Assicurazioni Generali SpA |
| Plastic Omnium vs. HANOVER INSURANCE | Plastic Omnium vs. GREENX METALS LTD | Plastic Omnium vs. Goosehead Insurance | Plastic Omnium vs. Zurich Insurance Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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