Correlation Between Zurich Insurance and Baloise Holding
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Baloise Holding 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 Baloise Holding 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 Baloise Holding Ltd, you can compare the effects of market volatilities on Zurich Insurance and Baloise Holding 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 Baloise Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Baloise Holding.
Diversification Opportunities for Zurich Insurance and Baloise Holding
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zurich and Baloise is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Baloise Holding Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baloise Holding 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 Baloise Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baloise Holding has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Baloise Holding go up and down completely randomly.
Pair Corralation between Zurich Insurance and Baloise Holding
Assuming the 90 days horizon Zurich Insurance is expected to generate 1.31 times less return on investment than Baloise Holding. But when comparing it to its historical volatility, Zurich Insurance Group is 1.36 times less risky than Baloise Holding. It trades about 0.05 of its potential returns per unit of risk. Baloise Holding Ltd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,422 in Baloise Holding Ltd on August 28, 2024 and sell it today you would earn a total of 478.00 from holding Baloise Holding Ltd or generate 33.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 67.98% |
| Values | Daily Returns |
Zurich Insurance Group vs. Baloise Holding Ltd
Performance |
| Timeline |
| Zurich Insurance |
| Baloise Holding |
Zurich Insurance and Baloise Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Baloise Holding
The main advantage of trading using opposite Zurich Insurance and Baloise Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Baloise Holding 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 Baloise Holding will offset losses from the drop in Baloise Holding's long position.| Zurich Insurance vs. Athene Holding | Zurich Insurance vs. Athene Holding | Zurich Insurance vs. Arch Capital Group |
| Baloise Holding vs. Athene Holding | Baloise Holding vs. Athene Holding | Baloise Holding vs. Arch Capital Group |
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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