Correlation Between ZURICH INSURANCE and Deutsche Bank

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

Diversification Opportunities for ZURICH INSURANCE and Deutsche Bank

0.59

Correlation Coefficient

ZURICH INSURANCE  Deutsche Bank

Very weak diversification

The 3 months correlation between ZURICH and Deutsche is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and Deutsche Bank Aktiengesellscha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank Aktien 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 Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank Aktien has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and Deutsche Bank go up and down completely randomly.

Pair Corralation between ZURICH INSURANCE and Deutsche Bank

Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to under-perform the Deutsche Bank. But the stock apears to be less risky and, when comparing its historical volatility, ZURICH INSURANCE GROUP is 1.34 times less risky than Deutsche Bank. The stock trades about -0.16 of its potential returns per unit of risk. The Deutsche Bank Aktiengesellschaft is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,679  in Deutsche Bank Aktiengesellschaft on October 11, 2024 and sell it today you would lose (2.00) from holding Deutsche Bank Aktiengesellschaft or give up 0.12% of portfolio value over 90 days.

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

ZURICH INSURANCE GROUP  vs.  Deutsche Bank Aktiengesellscha

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Deutsche Bank Aktien

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Deutsche Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ZURICH INSURANCE and Deutsche Bank

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

The idea behind ZURICH INSURANCE GROUP and Deutsche Bank Aktiengesellschaft 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.