Correlation Between ZURICH INSURANCE and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and INSURANCE AUST 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 INSURANCE AUST 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 INSURANCE AUST GRP, you can compare the effects of market volatilities on ZURICH INSURANCE and INSURANCE AUST 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 INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and INSURANCE AUST.
Diversification Opportunities for ZURICH INSURANCE and INSURANCE AUST
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ZURICH and INSURANCE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP 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 INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and INSURANCE AUST go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and INSURANCE AUST
Assuming the 90 days trading horizon ZURICH INSURANCE is expected to generate 1.24 times less return on investment than INSURANCE AUST. But when comparing it to its historical volatility, ZURICH INSURANCE GROUP is 1.21 times less risky than INSURANCE AUST. It trades about 0.12 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 337.00 in INSURANCE AUST GRP on August 29, 2024 and sell it today you would earn a total of 151.00 from holding INSURANCE AUST GRP or generate 44.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.53% |
| Values | Daily Returns |
ZURICH INSURANCE GROUP vs. INSURANCE AUST GRP
Performance |
| Timeline |
| ZURICH INSURANCE |
| INSURANCE AUST GRP |
ZURICH INSURANCE and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and INSURANCE AUST
The main advantage of trading using opposite ZURICH INSURANCE and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, INSURANCE AUST 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 INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Superior Plus Corp | ZURICH INSURANCE vs. SIVERS SEMICONDUCTORS AB |
| INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Superior Plus Corp | INSURANCE AUST vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |