Correlation Between ZURICH INSURANCE and Commerzbank

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

Diversification Opportunities for ZURICH INSURANCE and Commerzbank

-0.85

Correlation Coefficient

ZURICH INSURANCE  Commerzbank

Pay attention - limited upside

The 3 months correlation between ZURICH and Commerzbank is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and Commerzbank go up and down completely randomly.

Pair Corralation between ZURICH INSURANCE and Commerzbank

Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to generate 0.7 times more return on investment than Commerzbank. However, ZURICH INSURANCE GROUP is 1.44 times less risky than Commerzbank. It trades about 0.09 of its potential returns per unit of risk. Commerzbank AG is currently generating about 0.03 per unit of risk. If you would invest  2,760  in ZURICH INSURANCE GROUP on October 11, 2024 and sell it today you would earn a total of  100.00  from holding ZURICH INSURANCE GROUP or generate 3.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.44%
Values	Daily Returns

ZURICH INSURANCE GROUP  vs.  Commerzbank AG

ZURICH INSURANCE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZURICH INSURANCE GROUP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ZURICH INSURANCE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Commerzbank AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commerzbank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Commerzbank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ZURICH INSURANCE and Commerzbank

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

The idea behind ZURICH INSURANCE GROUP and Commerzbank AG 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.