Correlation Between Invesco Health and Zurich Insurance

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

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

Diversification Opportunities for Invesco Health and Zurich Insurance

0.74

Correlation Coefficient

Invesco Health  Zurich Insurance

Poor diversification

The 3 months correlation between Invesco and Zurich is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Health Care and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Invesco Health 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 Invesco Health Care 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 Invesco Health i.e., Invesco Health and Zurich Insurance go up and down completely randomly.

Pair Corralation between Invesco Health and Zurich Insurance

Assuming the 90 days trading horizon Invesco Health is expected to generate 2.12 times less return on investment than Zurich Insurance. But when comparing it to its historical volatility, Invesco Health Care is 1.32 times less risky than Zurich Insurance. It trades about 0.14 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Invesco Health Care  vs.  Zurich Insurance Group

Invesco Health Care

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Health Care are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Invesco Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 Invesco Health and Zurich Insurance

The main advantage of trading using opposite Invesco Health and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Health 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 Invesco Health Care 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.