Correlation Between ZURICH INSURANCE and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and REVO 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 REVO 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 REVO INSURANCE SPA, you can compare the effects of market volatilities on ZURICH INSURANCE and REVO 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 REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and REVO INSURANCE.
Diversification Opportunities for ZURICH INSURANCE and REVO INSURANCE
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ZURICH and REVO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA 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 REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and REVO INSURANCE go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and REVO INSURANCE
Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to generate 1.02 times more return on investment than REVO INSURANCE. However, ZURICH INSURANCE is 1.02 times more volatile than REVO INSURANCE SPA. It trades about 0.07 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.05 per unit of risk. If you would invest 2,000 in ZURICH INSURANCE GROUP on August 27, 2024 and sell it today you would earn a total of 920.00 from holding ZURICH INSURANCE GROUP or generate 46.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZURICH INSURANCE GROUP vs. REVO INSURANCE SPA
Performance |
| Timeline |
| ZURICH INSURANCE |
| REVO INSURANCE SPA |
ZURICH INSURANCE and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and REVO INSURANCE
The main advantage of trading using opposite ZURICH INSURANCE and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, REVO 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.| ZURICH INSURANCE vs. The Boston Beer | ZURICH INSURANCE vs. Media and Games | ZURICH INSURANCE vs. United Breweries Co | ZURICH INSURANCE vs. Molson Coors Beverage |
| REVO INSURANCE vs. Lyxor 1 | REVO INSURANCE vs. Xtrackers LevDAX | REVO INSURANCE vs. Xtrackers ShortDAX | REVO INSURANCE vs. Superior Plus Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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