Correlation Between Intermediate Capital and Zurich Insurance

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

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

Diversification Opportunities for Intermediate Capital and Zurich Insurance

0.09

Correlation Coefficient

Intermediate Capital  Zurich Insurance

Significant diversification

The 3 months correlation between Intermediate and Zurich is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Intermediate Capital 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 Intermediate Capital Group 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 Intermediate Capital i.e., Intermediate Capital and Zurich Insurance go up and down completely randomly.

Pair Corralation between Intermediate Capital and Zurich Insurance

Assuming the 90 days trading horizon Intermediate Capital is expected to generate 13.47 times less return on investment than Zurich Insurance. In addition to that, Intermediate Capital is 2.19 times more volatile than Zurich Insurance Group. It trades about 0.01 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.22 per unit of volatility. If you would invest  53,880  in Zurich Insurance Group on December 25, 2024 and sell it today you would earn a total of  7,140  from holding Zurich Insurance Group or generate 13.25% return on investment over 90 days.

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

Intermediate Capital Group  vs.  Zurich Insurance Group

Intermediate Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Zurich Insurance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Zurich Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intermediate Capital and Zurich Insurance

The main advantage of trading using opposite Intermediate Capital and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Capital 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 Intermediate Capital Group 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.