Correlation Between Zurich Insurance and AutoZone

Can any of the company-specific risk be diversified away by investing in both Zurich Insurance and AutoZone 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 AutoZone 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 AutoZone, you can compare the effects of market volatilities on Zurich Insurance and AutoZone 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 AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and AutoZone.

Diversification Opportunities for Zurich Insurance and AutoZone

0.76

Correlation Coefficient

Zurich Insurance  AutoZone

Poor diversification

The 3 months correlation between Zurich and AutoZone is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone 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 AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and AutoZone go up and down completely randomly.

Pair Corralation between Zurich Insurance and AutoZone

Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 1.18 times more return on investment than AutoZone. However, Zurich Insurance is 1.18 times more volatile than AutoZone. It trades about 0.07 of its potential returns per unit of risk. AutoZone is currently generating about 0.07 per unit of risk. If you would invest  2,081  in Zurich Insurance Group on October 6, 2024 and sell it today you would earn a total of  719.00  from holding Zurich Insurance Group or generate 34.55% return on investment over 90 days.

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

Zurich Insurance Group  vs.  AutoZone

Zurich Insurance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AutoZone

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AutoZone reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zurich Insurance and AutoZone

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

The idea behind Zurich Insurance Group and AutoZone 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 Commodity Directory module to find actively traded commodities issued by global exchanges.