Correlation Between Zurich Insurance and Universal Music

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Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and Universal Music 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 Universal Music 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 Universal Music Group, you can compare the effects of market volatilities on Zurich Insurance and Universal Music 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 Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Universal Music.

Diversification Opportunities for Zurich Insurance and Universal Music

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Zurich and Universal is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Universal Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Music 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 Universal Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Music Group has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Universal Music go up and down completely randomly.

Pair Corralation between Zurich Insurance and Universal Music

Assuming the 90 days trading horizon Zurich Insurance is expected to generate 1.1 times less return on investment than Universal Music. But when comparing it to its historical volatility, Zurich Insurance Group is 2.18 times less risky than Universal Music. It trades about 0.04 of its potential returns per unit of risk. Universal Music Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,221  in Universal Music Group on October 23, 2024 and sell it today you would earn a total of  257.00  from holding Universal Music Group or generate 11.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.8%
ValuesDaily Returns

Zurich Insurance Group  vs.  Universal Music Group

 Performance 
       Timeline  
Zurich Insurance 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Zurich Insurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Universal Music Group 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Universal Music Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Universal Music is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Zurich Insurance and Universal Music Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zurich Insurance and Universal Music

The main advantage of trading using opposite Zurich Insurance and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, Universal Music 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 Universal Music will offset losses from the drop in Universal Music's long position.
The idea behind Zurich Insurance Group and Universal Music Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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