Correlation Between FOMECONMEXSAB DCV and Zurich Insurance

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

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

Diversification Opportunities for FOMECONMEXSAB DCV and Zurich Insurance

-0.81

Correlation Coefficient

FOMECONMEXSAB DCV  Zurich Insurance

Pay attention - limited upside

The 3 months correlation between FOMECONMEXSAB and Zurich is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding FOMECONMEXSAB DCV UTS and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and FOMECONMEXSAB DCV 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 FOMECONMEXSAB DCV UTS 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 FOMECONMEXSAB DCV i.e., FOMECONMEXSAB DCV and Zurich Insurance go up and down completely randomly.

Pair Corralation between FOMECONMEXSAB DCV and Zurich Insurance

Assuming the 90 days trading horizon FOMECONMEXSAB DCV UTS is expected to generate 2.34 times more return on investment than Zurich Insurance. However, FOMECONMEXSAB DCV is 2.34 times more volatile than Zurich Insurance Group. It trades about 0.05 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.06 per unit of risk. If you would invest  426.00  in FOMECONMEXSAB DCV UTS on September 4, 2024 and sell it today you would earn a total of  394.00  from holding FOMECONMEXSAB DCV UTS or generate 92.49% return on investment over 90 days.

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

FOMECONMEXSAB DCV UTS  vs.  Zurich Insurance Group

FOMECONMEXSAB DCV UTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FOMECONMEXSAB DCV UTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Zurich Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Zurich Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FOMECONMEXSAB DCV and Zurich Insurance

The main advantage of trading using opposite FOMECONMEXSAB DCV and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOMECONMEXSAB DCV 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 FOMECONMEXSAB DCV UTS 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 Transaction History module to view history of all your transactions and understand their impact on performance.