Correlation Between ZURICH INSURANCE and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both ZURICH INSURANCE and Nordic Semiconductor 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 Nordic Semiconductor 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 Nordic Semiconductor ASA, you can compare the effects of market volatilities on ZURICH INSURANCE and Nordic Semiconductor 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 Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZURICH INSURANCE and Nordic Semiconductor.
Diversification Opportunities for ZURICH INSURANCE and Nordic Semiconductor
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between ZURICH and Nordic is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between ZURICH INSURANCE and Nordic Semiconductor
Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, ZURICH INSURANCE GROUP is 1.96 times less risky than Nordic Semiconductor. The stock trades about -0.11 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 864.00 in Nordic Semiconductor ASA on October 11, 2024 and sell it today you would earn a total of 48.00 from holding Nordic Semiconductor ASA or generate 5.56% 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. Nordic Semiconductor ASA
Performance |
Timeline |
ZURICH INSURANCE |
Nordic Semiconductor ASA |
ZURICH INSURANCE and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ZURICH INSURANCE and Nordic Semiconductor
The main advantage of trading using opposite ZURICH INSURANCE and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZURICH INSURANCE position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.ZURICH INSURANCE vs. NAKED WINES PLC | ZURICH INSURANCE vs. ALERION CLEANPOWER | ZURICH INSURANCE vs. PLANT VEDA FOODS | ZURICH INSURANCE vs. Austevoll Seafood ASA |
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Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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