Correlation Between Zurich Insurance and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway, you can compare the effects of market volatilities on Zurich Insurance and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Berkshire Hathaway.
Diversification Opportunities for Zurich Insurance and Berkshire Hathaway
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zurich and Berkshire is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Zurich Insurance and Berkshire Hathaway
Assuming the 90 days horizon Zurich Insurance is expected to generate 1.36 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, Zurich Insurance Group is 1.45 times less risky than Berkshire Hathaway. It trades about 0.15 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 68,835,400 in Berkshire Hathaway on August 28, 2024 and sell it today you would earn a total of 2,804,500 from holding Berkshire Hathaway or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurich Insurance Group vs. Berkshire Hathaway
Performance |
| Timeline |
| Zurich Insurance |
| Berkshire Hathaway |
Zurich Insurance and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurich Insurance and Berkshire Hathaway
The main advantage of trading using opposite Zurich Insurance and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Zurich Insurance vs. Assicurazioni Generali SpA | Zurich Insurance vs. ageas SANV | Zurich Insurance vs. AXA SA | Zurich Insurance vs. Sampo OYJ |
| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Hartford Financial Services |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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