Correlation Between Zurich Insurance and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Norwegian Air 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 Norwegian Air 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 Norwegian Air Shuttle, you can compare the effects of market volatilities on Zurich Insurance and Norwegian Air 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 Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Norwegian Air.
Diversification Opportunities for Zurich Insurance and Norwegian Air
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zurich and Norwegian is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle 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 Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Norwegian Air go up and down completely randomly.
Pair Corralation between Zurich Insurance and Norwegian Air
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.48 times more return on investment than Norwegian Air. However, Zurich Insurance Group is 2.1 times less risky than Norwegian Air. It trades about 0.06 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.03 per unit of risk. If you would invest 1,994 in Zurich Insurance Group on September 3, 2024 and sell it today you would earn a total of 1,026 from holding Zurich Insurance Group or generate 51.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Zurich Insurance |
| Norwegian Air Shuttle |
Zurich Insurance and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Norwegian Air
The main advantage of trading using opposite Zurich Insurance and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Zurich Insurance vs. Berkshire Hathaway | Zurich Insurance vs. Berkshire Hathaway | Zurich Insurance vs. Superior Plus Corp | Zurich Insurance vs. NMI Holdings |
| Norwegian Air vs. SHIP HEALTHCARE HLDGINC | Norwegian Air vs. GALENA MINING LTD | Norwegian Air vs. Tianjin Capital Environmental | Norwegian Air vs. BlueScope Steel Limited |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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