Correlation Between Zurich Insurance and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Selective 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 Selective 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 Selective Insurance Group, you can compare the effects of market volatilities on Zurich Insurance and Selective 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 Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Selective Insurance.
Diversification Opportunities for Zurich Insurance and Selective Insurance
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zurich and Selective is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective 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 Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Selective Insurance go up and down completely randomly.
Pair Corralation between Zurich Insurance and Selective Insurance
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 1.77 times more return on investment than Selective Insurance. However, Zurich Insurance is 1.77 times more volatile than Selective Insurance Group. It trades about 0.14 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.21 per unit of risk. If you would invest 2,720 in Zurich Insurance Group on September 15, 2024 and sell it today you would earn a total of 180.00 from holding Zurich Insurance Group or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Selective Insurance Group
Performance |
| Timeline |
| Zurich Insurance |
| Selective Insurance |
Zurich Insurance and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Selective Insurance
The main advantage of trading using opposite Zurich Insurance and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Selective 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 Selective Insurance will offset losses from the drop in Selective Insurance'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 |
| Selective Insurance vs. Insurance Australia Group | Selective Insurance vs. Superior Plus Corp | Selective Insurance vs. SIVERS SEMICONDUCTORS AB | Selective Insurance vs. CHINA HUARONG ENERHD 50 |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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