Correlation Between Zurich Insurance and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO , you can compare the effects of market volatilities on Zurich Insurance and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and IMPERIAL TOBACCO.
Diversification Opportunities for Zurich Insurance and IMPERIAL TOBACCO
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zurich and IMPERIAL is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Zurich Insurance and IMPERIAL TOBACCO
Assuming the 90 days trading horizon Zurich Insurance Group is expected to under-perform the IMPERIAL TOBACCO. In addition to that, Zurich Insurance is 2.43 times more volatile than IMPERIAL TOBACCO . It trades about -0.15 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about -0.28 per unit of volatility. If you would invest 3,140 in IMPERIAL TOBACCO on October 17, 2024 and sell it today you would lose (105.00) from holding IMPERIAL TOBACCO or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Zurich Insurance Group vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| Zurich Insurance |
| IMPERIAL TOBACCO |
Zurich Insurance and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and IMPERIAL TOBACCO
The main advantage of trading using opposite Zurich Insurance and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| Zurich Insurance vs. ELMOS SEMICONDUCTOR | Zurich Insurance vs. ON SEMICONDUCTOR | Zurich Insurance vs. ETFS Coffee ETC | Zurich Insurance vs. Algonquin Power Utilities |
| IMPERIAL TOBACCO vs. VIENNA INSURANCE GR | IMPERIAL TOBACCO vs. COMBA TELECOM SYST | IMPERIAL TOBACCO vs. Zurich Insurance Group | IMPERIAL TOBACCO vs. Safety 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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