Correlation Between Zurich Insurance and Geberit AG
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Geberit AG 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 Geberit AG 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 Geberit AG, you can compare the effects of market volatilities on Zurich Insurance and Geberit AG 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 Geberit AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Geberit AG.
Diversification Opportunities for Zurich Insurance and Geberit AG
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zurich and Geberit is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Geberit AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit AG 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 Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Geberit AG go up and down completely randomly.
Pair Corralation between Zurich Insurance and Geberit AG
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.59 times more return on investment than Geberit AG. However, Zurich Insurance Group is 1.69 times less risky than Geberit AG. It trades about 0.1 of its potential returns per unit of risk. Geberit AG is currently generating about 0.02 per unit of risk. If you would invest 40,164 in Zurich Insurance Group on August 26, 2024 and sell it today you would earn a total of 15,136 from holding Zurich Insurance Group or generate 37.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Geberit AG
Performance |
| Timeline |
| Zurich Insurance |
| Geberit AG |
Zurich Insurance and Geberit AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Geberit AG
The main advantage of trading using opposite Zurich Insurance and Geberit AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Geberit AG 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 Geberit AG will offset losses from the drop in Geberit AG's long position.| Zurich Insurance vs. Swiss Re AG | Zurich Insurance vs. Novartis AG | Zurich Insurance vs. Swiss Life Holding | Zurich Insurance vs. UBS Group AG |
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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