Correlation Between ZURICH INSURANCE and CARSALESCOM

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

Diversification Opportunities for ZURICH INSURANCE and CARSALESCOM

0.47

Correlation Coefficient

ZURICH INSURANCE  CARSALESCOM

Very weak diversification

The 3 months correlation between ZURICH and CARSALESCOM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ZURICH INSURANCE GROUP and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of ZURICH INSURANCE i.e., ZURICH INSURANCE and CARSALESCOM go up and down completely randomly.

Pair Corralation between ZURICH INSURANCE and CARSALESCOM

Assuming the 90 days trading horizon ZURICH INSURANCE GROUP is expected to under-perform the CARSALESCOM. But the stock apears to be less risky and, when comparing its historical volatility, ZURICH INSURANCE GROUP is 1.55 times less risky than CARSALESCOM. The stock trades about -0.16 of its potential returns per unit of risk. The CARSALESCOM is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,380  in CARSALESCOM on October 11, 2024 and sell it today you would lose (20.00) from holding CARSALESCOM or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

ZURICH INSURANCE GROUP  vs.  CARSALESCOM

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.

CARSALESCOM

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CARSALESCOM are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CARSALESCOM is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ZURICH INSURANCE and CARSALESCOM

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

The idea behind ZURICH INSURANCE GROUP and CARSALESCOM 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.