Correlation Between Basler Kantonalbank and Zurich Insurance

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

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

Diversification Opportunities for Basler Kantonalbank and Zurich Insurance

0.69

Correlation Coefficient

Basler Kantonalbank  Zurich Insurance

Poor diversification

The 3 months correlation between Basler and Zurich is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Basler Kantonalbank and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Basler Kantonalbank 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 Basler Kantonalbank 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 Basler Kantonalbank i.e., Basler Kantonalbank and Zurich Insurance go up and down completely randomly.

Pair Corralation between Basler Kantonalbank and Zurich Insurance

Assuming the 90 days trading horizon Basler Kantonalbank is expected to generate 0.83 times more return on investment than Zurich Insurance. However, Basler Kantonalbank is 1.21 times less risky than Zurich Insurance. It trades about 0.1 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about -0.2 per unit of risk. If you would invest  6,720  in Basler Kantonalbank on September 29, 2024 and sell it today you would earn a total of  80.00  from holding Basler Kantonalbank or generate 1.19% return on investment over 90 days.

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

Basler Kantonalbank  vs.  Zurich Insurance Group

Basler Kantonalbank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Basler Kantonalbank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Basler Kantonalbank is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Zurich Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Zurich Insurance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Basler Kantonalbank and Zurich Insurance

The main advantage of trading using opposite Basler Kantonalbank and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basler Kantonalbank 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 Basler Kantonalbank 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.