Correlation Between ZURICH INSURANCE and THORNEY TECHS
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and THORNEY TECHS 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 THORNEY TECHS 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 THORNEY TECHS LTD, you can compare the effects of market volatilities on ZURICH INSURANCE and THORNEY TECHS 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 THORNEY TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and THORNEY TECHS.
Diversification Opportunities for ZURICH INSURANCE and THORNEY TECHS
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ZURICH and THORNEY is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and THORNEY TECHS go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and THORNEY TECHS
Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to generate 0.24 times more return on investment than THORNEY TECHS. However, ZURICH INSURANCE GROUP is 4.2 times less risky than THORNEY TECHS. It trades about 0.1 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about 0.01 per unit of risk. If you would invest 2,182 in ZURICH INSURANCE GROUP on September 12, 2024 and sell it today you would earn a total of 738.00 from holding ZURICH INSURANCE GROUP or generate 33.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
ZURICH INSURANCE GROUP vs. THORNEY TECHS LTD
Performance |
| Timeline |
| ZURICH INSURANCE |
| THORNEY TECHS LTD |
ZURICH INSURANCE and THORNEY TECHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZURICH INSURANCE and THORNEY TECHS
The main advantage of trading using opposite ZURICH INSURANCE and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS's long position.| ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc | ZURICH INSURANCE vs. Apple Inc |
| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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