Correlation Between MYFAIR GOLD and Zurich Insurance

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

By analyzing existing cross correlation between MYFAIR GOLD P and Zurich Insurance Group, you can compare the effects of market volatilities on MYFAIR GOLD and Zurich Insurance 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 MYFAIR GOLD with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYFAIR GOLD and Zurich Insurance.

Diversification Opportunities for MYFAIR GOLD and Zurich Insurance

-0.52

Correlation Coefficient

MYFAIR GOLD  Zurich Insurance

Excellent diversification

The 3 months correlation between MYFAIR and Zurich is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding MYFAIR GOLD P and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and MYFAIR GOLD 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 MYFAIR GOLD P are associated (or correlated) with Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of MYFAIR GOLD i.e., MYFAIR GOLD and Zurich Insurance go up and down completely randomly.

Pair Corralation between MYFAIR GOLD and Zurich Insurance

Assuming the 90 days horizon MYFAIR GOLD P is expected to under-perform the Zurich Insurance. In addition to that, MYFAIR GOLD is 1.03 times more volatile than Zurich Insurance Group. It trades about -0.4 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about -0.21 per unit of volatility. If you would invest  2,980  in Zurich Insurance Group on October 4, 2024 and sell it today you would lose (180.00) from holding Zurich Insurance Group or give up 6.04% of portfolio value over 90 days.

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

MYFAIR GOLD P  vs.  Zurich Insurance Group

MYFAIR GOLD P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MYFAIR GOLD P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Zurich Insurance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MYFAIR GOLD and Zurich Insurance

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

The idea behind MYFAIR GOLD P and Zurich Insurance 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.