Correlation Between Zurich Insurance and Safety Insurance

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

Diversification Opportunities for Zurich Insurance and Safety Insurance

-0.19

Correlation Coefficient

Zurich Insurance  Safety Insurance

Good diversification

The 3 months correlation between Zurich and Safety is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance 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 Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Safety Insurance go up and down completely randomly.

Pair Corralation between Zurich Insurance and Safety Insurance

Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 1.46 times more return on investment than Safety Insurance. However, Zurich Insurance is 1.46 times more volatile than Safety Insurance Group. It trades about 0.14 of its potential returns per unit of risk. Safety Insurance Group is currently generating about -0.1 per unit of risk. If you would invest  2,800  in Zurich Insurance Group on December 2, 2024 and sell it today you would earn a total of  400.00  from holding Zurich Insurance Group or generate 14.29% return on investment over 90 days.

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

Zurich Insurance Group  vs.  Safety Insurance Group

Zurich Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 5 (%) 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 April 2025.

Safety Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Safety Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Zurich Insurance and Safety Insurance

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

The idea behind Zurich Insurance Group and Safety 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.