Correlation Between Zurich Insurance and BW OFFSHORE

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

Diversification Opportunities for Zurich Insurance and BW OFFSHORE

-0.61

Correlation Coefficient

Zurich Insurance  BW OFFSHORE

Excellent diversification

The 3 months correlation between Zurich and XY81 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD 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 BW OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW OFFSHORE LTD has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and BW OFFSHORE go up and down completely randomly.

Pair Corralation between Zurich Insurance and BW OFFSHORE

Assuming the 90 days trading horizon Zurich Insurance Group is expected to under-perform the BW OFFSHORE. But the stock apears to be less risky and, when comparing its historical volatility, Zurich Insurance Group is 1.51 times less risky than BW OFFSHORE. The stock trades about -0.21 of its potential returns per unit of risk. The BW OFFSHORE LTD is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  227.00  in BW OFFSHORE LTD on October 4, 2024 and sell it today you would earn a total of  19.00  from holding BW OFFSHORE LTD or generate 8.37% 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.  BW OFFSHORE LTD

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.

BW OFFSHORE LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW OFFSHORE LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BW OFFSHORE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zurich Insurance and BW OFFSHORE

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

The idea behind Zurich Insurance Group and BW OFFSHORE LTD 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.