Correlation Between CSIF III and Zurich Invest

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

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

Diversification Opportunities for CSIF III and Zurich Invest

0.37

Correlation Coefficient

CSIF III  Zurich Invest

Weak diversification

The 3 months correlation between CSIF and Zurich is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CSIF III Eq and Zurich Invest II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Invest II and CSIF III 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 CSIF III Eq are associated (or correlated) with Zurich Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Invest II has no effect on the direction of CSIF III i.e., CSIF III and Zurich Invest go up and down completely randomly.

Pair Corralation between CSIF III and Zurich Invest

Assuming the 90 days trading horizon CSIF III Eq is expected to under-perform the Zurich Invest. In addition to that, CSIF III is 5.39 times more volatile than Zurich Invest II. It trades about -0.05 of its total potential returns per unit of risk. Zurich Invest II is currently generating about -0.11 per unit of volatility. If you would invest  875.00  in Zurich Invest II on September 27, 2024 and sell it today you would lose (3.00) from holding Zurich Invest II or give up 0.34% of portfolio value over 90 days.

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

CSIF III Eq  vs.  Zurich Invest II

CSIF III Eq

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSIF III Eq are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather unsteady technical and fundamental indicators, CSIF III may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with CSIF III and Zurich Invest

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

The idea behind CSIF III Eq and Zurich Invest II 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.