Correlation Between ZURICH INSURANCE and Bank of America
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and Bank of America 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 Bank of America 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 Verizon Communications, you can compare the effects of market volatilities on ZURICH INSURANCE and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and Bank of America.
Diversification Opportunities for ZURICH INSURANCE and Bank of America
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ZURICH and Bank is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and Bank of America go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and Bank of America
Assuming the 90 days trading horizon ZURICH INSURANCE is expected to generate 1.04 times less return on investment than Bank of America. But when comparing it to its historical volatility, ZURICH INSURANCE GROUP is 1.01 times less risky than Bank of America. It trades about 0.32 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,858 in Verizon Communications on September 1, 2024 and sell it today you would earn a total of 342.00 from holding Verizon Communications or generate 8.86% 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. Verizon Communications
Performance |
| Timeline |
| ZURICH INSURANCE |
| Verizon Communications |
ZURICH INSURANCE and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and Bank of America
The main advantage of trading using opposite ZURICH INSURANCE and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| ZURICH INSURANCE vs. SIVERS SEMICONDUCTORS AB | ZURICH INSURANCE vs. Darden Restaurants | ZURICH INSURANCE vs. Reliance Steel Aluminum | ZURICH INSURANCE vs. Q2M Managementberatung AG |
| Bank of America vs. Direct Line Insurance | Bank of America vs. Harmony Gold Mining | Bank of America vs. The Hanover Insurance | Bank of America vs. Jacquet Metal Service |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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