Correlation Between Zurich Insurance and InPlay Oil

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

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

Diversification Opportunities for Zurich Insurance and InPlay Oil

-0.63

Correlation Coefficient

Zurich Insurance  InPlay Oil

Excellent diversification

The 3 months correlation between Zurich and InPlay is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp and Zurich Insurance 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 Zurich Insurance Group are associated (or correlated) with InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and InPlay Oil go up and down completely randomly.

Pair Corralation between Zurich Insurance and InPlay Oil

Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.79 times more return on investment than InPlay Oil. However, Zurich Insurance Group is 1.27 times less risky than InPlay Oil. It trades about 0.05 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.04 per unit of risk. If you would invest  1,986  in Zurich Insurance Group on October 5, 2024 and sell it today you would earn a total of  814.00  from holding Zurich Insurance Group or generate 40.99% return on investment over 90 days.

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

Zurich Insurance Group  vs.  InPlay Oil Corp

Zurich Insurance

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Zurich Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile forward indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

InPlay Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Zurich Insurance and InPlay Oil

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

The idea behind Zurich Insurance Group and InPlay Oil Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.