Correlation Between ZURICH INSURANCE and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on ZURICH INSURANCE and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and ESSILORLUXOTTICA.
Diversification Opportunities for ZURICH INSURANCE and ESSILORLUXOTTICA
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ZURICH and ESSILORLUXOTTICA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and ESSILORLUXOTTICA
Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to under-perform the ESSILORLUXOTTICA. In addition to that, ZURICH INSURANCE is 1.09 times more volatile than ESSILORLUXOTTICA 12ON. It trades about -0.16 of its total potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.12 per unit of volatility. If you would invest 11,300 in ESSILORLUXOTTICA 12ON on October 9, 2024 and sell it today you would earn a total of 200.00 from holding ESSILORLUXOTTICA 12ON or generate 1.77% 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. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| ZURICH INSURANCE |
| ESSILORLUXOTTICA 12ON |
ZURICH INSURANCE and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and ESSILORLUXOTTICA
The main advantage of trading using opposite ZURICH INSURANCE and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA's long position.| ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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