Correlation Between Zurich Insurance and Allianz SE

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

Diversification Opportunities for Zurich Insurance and Allianz SE

0.96

Correlation Coefficient

Zurich Insurance  Allianz SE

Almost no diversification

The 3 months correlation between Zurich and Allianz is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE 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 Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Allianz SE go up and down completely randomly.

Pair Corralation between Zurich Insurance and Allianz SE

Assuming the 90 days horizon Zurich Insurance is expected to generate 1.28 times less return on investment than Allianz SE. But when comparing it to its historical volatility, Zurich Insurance Group is 1.87 times less risky than Allianz SE. It trades about 0.28 of its potential returns per unit of risk. Allianz SE is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  30,575  in Allianz SE on December 29, 2024 and sell it today you would earn a total of  6,950  from holding Allianz SE or generate 22.73% return on investment over 90 days.

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

Zurich Insurance Group  vs.  Allianz SE

Zurich Insurance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Zurich Insurance showed solid returns over the last few months and may actually be approaching a breakup point.

Allianz SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Allianz SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zurich Insurance and Allianz SE

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

The idea behind Zurich Insurance Group and Allianz SE 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 Global Correlations module to find global opportunities by holding instruments from different markets.