Correlation Between ZURICH INSURANCE and Loews Corp
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and Loews Corp 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 Loews Corp 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 Loews Corp, you can compare the effects of market volatilities on ZURICH INSURANCE and Loews Corp 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 Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and Loews Corp.
Diversification Opportunities for ZURICH INSURANCE and Loews Corp
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ZURICH and Loews is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and Loews Corp go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and Loews Corp
Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to generate 0.93 times more return on investment than Loews Corp. However, ZURICH INSURANCE GROUP is 1.07 times less risky than Loews Corp. It trades about 0.08 of its potential returns per unit of risk. Loews Corp is currently generating about 0.07 per unit of risk. If you would invest 1,956 in ZURICH INSURANCE GROUP on September 12, 2024 and sell it today you would earn a total of 984.00 from holding ZURICH INSURANCE GROUP or generate 50.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZURICH INSURANCE GROUP vs. Loews Corp
Performance |
| Timeline |
| ZURICH INSURANCE |
| Loews Corp |
ZURICH INSURANCE and Loews Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and Loews Corp
The main advantage of trading using opposite ZURICH INSURANCE and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, Loews Corp 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 Loews Corp will offset losses from the drop in Loews Corp'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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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