Correlation Between Zurich Insurance and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Japan 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 Japan 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 Japan Tobacco, you can compare the effects of market volatilities on Zurich Insurance and Japan 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 Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Japan Tobacco.
Diversification Opportunities for Zurich Insurance and Japan Tobacco
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zurich and Japan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan 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 Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Japan Tobacco go up and down completely randomly.
Pair Corralation between Zurich Insurance and Japan Tobacco
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.97 times more return on investment than Japan Tobacco. However, Zurich Insurance Group is 1.03 times less risky than Japan Tobacco. It trades about 0.05 of its potential returns per unit of risk. Japan Tobacco is currently generating about 0.04 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 | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Zurich Insurance Group vs. Japan Tobacco
Performance |
Timeline |
Zurich Insurance |
Japan Tobacco |
Zurich Insurance and Japan Tobacco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zurich Insurance and Japan Tobacco
The main advantage of trading using opposite Zurich Insurance and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Japan 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 Japan Tobacco will offset losses from the drop in Japan Tobacco'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 |
Japan Tobacco vs. TROPHY GAMES DEV | Japan Tobacco vs. SALESFORCE INC CDR | Japan Tobacco vs. The Boston Beer | Japan Tobacco vs. ANGLER GAMING PLC |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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