Correlation Between ZURICH INSURANCE and Seiko Epson

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

Diversification Opportunities for ZURICH INSURANCE and Seiko Epson

-0.54

Correlation Coefficient

ZURICH INSURANCE  Seiko Epson

Excellent diversification

The 3 months correlation between ZURICH and Seiko is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and Seiko Epson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seiko Epson 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 Seiko Epson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seiko Epson has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and Seiko Epson go up and down completely randomly.

Pair Corralation between ZURICH INSURANCE and Seiko Epson

Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to generate 1.58 times more return on investment than Seiko Epson. However, ZURICH INSURANCE is 1.58 times more volatile than Seiko Epson. It trades about 0.16 of its potential returns per unit of risk. Seiko Epson is currently generating about 0.01 per unit of risk. If you would invest  2,960  in ZURICH INSURANCE GROUP on December 20, 2024 and sell it today you would earn a total of  180.00  from holding ZURICH INSURANCE GROUP or generate 6.08% return on investment over 90 days.

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

ZURICH INSURANCE GROUP  vs.  Seiko Epson

ZURICH INSURANCE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZURICH INSURANCE GROUP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ZURICH INSURANCE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Seiko Epson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seiko Epson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ZURICH INSURANCE and Seiko Epson

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

The idea behind ZURICH INSURANCE GROUP and Seiko Epson 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.