Correlation Between Zurich Insurance and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Safety Insurance 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 Safety Insurance 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 Safety Insurance Group, you can compare the effects of market volatilities on Zurich Insurance and Safety Insurance 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 Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Safety Insurance.
Diversification Opportunities for Zurich Insurance and Safety Insurance
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zurich and Safety is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance 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 Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Safety Insurance go up and down completely randomly.
Pair Corralation between Zurich Insurance and Safety Insurance
Assuming the 90 days trading horizon Zurich Insurance is expected to generate 1.12 times less return on investment than Safety Insurance. In addition to that, Zurich Insurance is 1.04 times more volatile than Safety Insurance Group. It trades about 0.23 of its total potential returns per unit of risk. Safety Insurance Group is currently generating about 0.27 per unit of volatility. If you would invest 7,200 in Safety Insurance Group on September 1, 2024 and sell it today you would earn a total of 800.00 from holding Safety Insurance Group or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Safety Insurance Group
Performance |
| Timeline |
| Zurich Insurance |
| Safety Insurance |
Zurich Insurance and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Safety Insurance
The main advantage of trading using opposite Zurich Insurance and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Safety Insurance 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 Safety Insurance will offset losses from the drop in Safety Insurance's long position.| Zurich Insurance vs. Ribbon Communications | Zurich Insurance vs. Rogers Communications | Zurich Insurance vs. Cogent Communications Holdings | Zurich Insurance vs. Autohome ADR |
| Safety Insurance vs. The Progressive | Safety Insurance vs. Fairfax Financial Holdings | Safety Insurance vs. Insurance Australia 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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