Correlation Between ZURICH INSURANCE and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and Universal 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 Universal 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 Universal Insurance Holdings, you can compare the effects of market volatilities on ZURICH INSURANCE and Universal 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and Universal Insurance.
Diversification Opportunities for ZURICH INSURANCE and Universal Insurance
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ZURICH and Universal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and Universal Insurance go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and Universal Insurance
Assuming the 90 days trading horizon ZURICH INSURANCE is expected to generate 1.21 times less return on investment than Universal Insurance. But when comparing it to its historical volatility, ZURICH INSURANCE GROUP is 2.45 times less risky than Universal Insurance. It trades about 0.15 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,725 in Universal Insurance Holdings on August 28, 2024 and sell it today you would earn a total of 415.00 from holding Universal Insurance Holdings or generate 24.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
ZURICH INSURANCE GROUP vs. Universal Insurance Holdings
Performance |
| Timeline |
| ZURICH INSURANCE |
| Universal Insurance |
ZURICH INSURANCE and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and Universal Insurance
The main advantage of trading using opposite ZURICH INSURANCE and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, Universal 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| ZURICH INSURANCE vs. ALTAIR RES INC | ZURICH INSURANCE vs. Ryanair Holdings plc | ZURICH INSURANCE vs. Evolution Mining Limited | ZURICH INSURANCE vs. ADRIATIC METALS LS 013355 |
| Universal Insurance vs. Algonquin Power Utilities | Universal Insurance vs. BE Semiconductor Industries | Universal Insurance vs. NORTHEAST UTILITIES | Universal Insurance vs. SERI INDUSTRIAL EO |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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