Correlation Between Zurich Insurance and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Prudential Financial 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 Prudential Financial 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 Prudential Financial, you can compare the effects of market volatilities on Zurich Insurance and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Prudential Financial.
Diversification Opportunities for Zurich Insurance and Prudential Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zurich and Prudential is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Prudential Financial go up and down completely randomly.
Pair Corralation between Zurich Insurance and Prudential Financial
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 1.3 times more return on investment than Prudential Financial. However, Zurich Insurance is 1.3 times more volatile than Prudential Financial. It trades about 0.1 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.08 per unit of risk. If you would invest 2,390 in Zurich Insurance Group on September 3, 2024 and sell it today you would earn a total of 630.00 from holding Zurich Insurance Group or generate 26.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Prudential Financial
Performance |
| Timeline |
| Zurich Insurance |
| Prudential Financial |
Zurich Insurance and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Prudential Financial
The main advantage of trading using opposite Zurich Insurance and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Zurich Insurance vs. Berkshire Hathaway | Zurich Insurance vs. Berkshire Hathaway | Zurich Insurance vs. Superior Plus Corp | Zurich Insurance vs. NMI Holdings |
| Prudential Financial vs. Ping An Insurance | Prudential Financial vs. China Life Insurance | Prudential Financial vs. Superior Plus Corp | Prudential Financial vs. Origin Agritech |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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