Correlation Between Zurich Insurance and Glencore PLC

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

Diversification Opportunities for Zurich Insurance and Glencore PLC

-0.5

Correlation Coefficient

Zurich Insurance  Glencore PLC

Very good diversification

The 3 months correlation between Zurich and Glencore is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC 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 Glencore PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore PLC has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Glencore PLC go up and down completely randomly.

Pair Corralation between Zurich Insurance and Glencore PLC

Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.49 times more return on investment than Glencore PLC. However, Zurich Insurance Group is 2.05 times less risky than Glencore PLC. It trades about 0.14 of its potential returns per unit of risk. Glencore PLC is currently generating about -0.14 per unit of risk. If you would invest  50,700  in Zurich Insurance Group on October 8, 2024 and sell it today you would earn a total of  3,510  from holding Zurich Insurance Group or generate 6.92% return on investment over 90 days.

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

Zurich Insurance Group  vs.  Glencore PLC

Zurich Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Glencore PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Zurich Insurance and Glencore PLC

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

The idea behind Zurich Insurance Group and Glencore PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.