Correlation Between Zurich Invest and CSIF I

Can any of the company-specific risk be diversified away by investing in both Zurich Invest and CSIF I 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 Invest and CSIF I into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zurich Invest II and CSIF I Equity, you can compare the effects of market volatilities on Zurich Invest and CSIF I 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 Invest with a short position of CSIF I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Invest and CSIF I.

Diversification Opportunities for Zurich Invest and CSIF I

0.22

Correlation Coefficient

Zurich Invest  CSIF I

Modest diversification

The 3 months correlation between Zurich and CSIF is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Invest II and CSIF I Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSIF I Equity and Zurich Invest 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 Invest II are associated (or correlated) with CSIF I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSIF I Equity has no effect on the direction of Zurich Invest i.e., Zurich Invest and CSIF I go up and down completely randomly.

Pair Corralation between Zurich Invest and CSIF I

Assuming the 90 days trading horizon Zurich Invest is expected to generate 4.93 times less return on investment than CSIF I. But when comparing it to its historical volatility, Zurich Invest II is 4.62 times less risky than CSIF I. It trades about 0.03 of its potential returns per unit of risk. CSIF I Equity is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  87,221  in CSIF I Equity on October 15, 2024 and sell it today you would earn a total of  11,526  from holding CSIF I Equity or generate 13.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Zurich Invest II  vs.  CSIF I Equity

Zurich Invest II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zurich Invest II has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady forward-looking indicators, Zurich Invest is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

CSIF I Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSIF I Equity has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong forward indicators, CSIF I is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Zurich Invest and CSIF I

The main advantage of trading using opposite Zurich Invest and CSIF I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Invest position performs unexpectedly, CSIF I 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 CSIF I will offset losses from the drop in CSIF I's long position.

The idea behind Zurich Invest II and CSIF I Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.