Correlation Between ZURICH INSURANCE and WPP SP
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and WPP SP 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 WPP SP 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 WPP SP ADR, you can compare the effects of market volatilities on ZURICH INSURANCE and WPP SP 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 WPP SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and WPP SP.
Diversification Opportunities for ZURICH INSURANCE and WPP SP
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ZURICH and WPP is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and WPP SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP SP ADR 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 WPP SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP SP ADR has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and WPP SP go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and WPP SP
Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to generate 0.88 times more return on investment than WPP SP. However, ZURICH INSURANCE GROUP is 1.13 times less risky than WPP SP. It trades about 0.36 of its potential returns per unit of risk. WPP SP ADR is currently generating about 0.19 per unit of risk. If you would invest 2,700 in ZURICH INSURANCE GROUP on September 5, 2024 and sell it today you would earn a total of 260.00 from holding ZURICH INSURANCE GROUP or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ZURICH INSURANCE GROUP vs. WPP SP ADR
Performance |
| Timeline |
| ZURICH INSURANCE |
| WPP SP ADR |
ZURICH INSURANCE and WPP SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and WPP SP
The main advantage of trading using opposite ZURICH INSURANCE and WPP SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, WPP SP 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 WPP SP will offset losses from the drop in WPP SP's long position.| ZURICH INSURANCE vs. COMMERCIAL VEHICLE | ZURICH INSURANCE vs. VIRGIN WINES UK | ZURICH INSURANCE vs. NAKED WINES PLC | ZURICH INSURANCE vs. ARROW ELECTRONICS |
| WPP SP vs. Ribbon Communications | WPP SP vs. ZURICH INSURANCE GROUP | WPP SP vs. Citic Telecom International | WPP SP vs. Safety Insurance 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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