Correlation Between Zurich Insurance and Swatch Group
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Swatch Group 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 Swatch Group 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 Swatch Group AG, you can compare the effects of market volatilities on Zurich Insurance and Swatch Group 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 Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Swatch Group.
Diversification Opportunities for Zurich Insurance and Swatch Group
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zurich and Swatch is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Swatch Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group 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 Swatch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group AG has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Swatch Group go up and down completely randomly.
Pair Corralation between Zurich Insurance and Swatch Group
Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.67 times more return on investment than Swatch Group. However, Zurich Insurance Group is 1.5 times less risky than Swatch Group. It trades about 0.21 of its potential returns per unit of risk. Swatch Group AG is currently generating about 0.03 per unit of risk. If you would invest 52,380 in Zurich Insurance Group on September 12, 2024 and sell it today you would earn a total of 2,420 from holding Zurich Insurance Group or generate 4.62% 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. Swatch Group AG
Performance |
| Timeline |
| Zurich Insurance |
| Swatch Group AG |
Zurich Insurance and Swatch Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Swatch Group
The main advantage of trading using opposite Zurich Insurance and Swatch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Swatch Group 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 Swatch Group will offset losses from the drop in Swatch Group's long position.| Zurich Insurance vs. Swiss Re AG | Zurich Insurance vs. Swisscom AG | Zurich Insurance vs. Lonza Group AG | Zurich Insurance vs. Novartis AG |
| Swatch Group vs. Compagnie Financire Richemont | Swatch Group vs. Swiss Life Holding | Swatch Group vs. Swisscom AG | Swatch Group vs. Swiss Re 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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