Correlation Between Zurich Insurance and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Arch Capital 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 Arch Capital 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 Arch Capital Group, you can compare the effects of market volatilities on Zurich Insurance and Arch Capital 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 Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Arch Capital.
Diversification Opportunities for Zurich Insurance and Arch Capital
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zurich and Arch is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group 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 Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Arch Capital go up and down completely randomly.
Pair Corralation between Zurich Insurance and Arch Capital
Assuming the 90 days horizon Zurich Insurance Group is expected to generate 6.17 times more return on investment than Arch Capital. However, Zurich Insurance is 6.17 times more volatile than Arch Capital Group. It trades about 0.03 of its potential returns per unit of risk. Arch Capital Group is currently generating about 0.04 per unit of risk. If you would invest 2,138 in Zurich Insurance Group on August 24, 2024 and sell it today you would earn a total of 866.00 from holding Zurich Insurance Group or generate 40.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Arch Capital Group
Performance |
| Timeline |
| Zurich Insurance |
| Arch Capital Group |
Zurich Insurance and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Arch Capital
The main advantage of trading using opposite Zurich Insurance and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital's long position.| Zurich Insurance vs. Assicurazioni Generali SpA | Zurich Insurance vs. ageas SANV | Zurich Insurance vs. AXA SA | Zurich Insurance vs. Sampo OYJ |
| Arch Capital vs. Athene Holding | Arch Capital vs. The Hartford Financial | Arch Capital vs. Arch Capital Group | Arch Capital vs. Athene Holding |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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