Correlation Between Zurich Insurance and Athene Holding

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

Diversification Opportunities for Zurich Insurance and Athene Holding

0.48

Correlation Coefficient

Zurich Insurance  Athene Holding

Very weak diversification

The 3 months correlation between Zurich and Athene is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Athene Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athene Holding 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 Athene Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athene Holding has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Athene Holding go up and down completely randomly.

Pair Corralation between Zurich Insurance and Athene Holding

Assuming the 90 days horizon Zurich Insurance Group is expected to generate 2.65 times more return on investment than Athene Holding. However, Zurich Insurance is 2.65 times more volatile than Athene Holding. It trades about 0.17 of its potential returns per unit of risk. Athene Holding is currently generating about 0.11 per unit of risk. If you would invest  2,911  in Zurich Insurance Group on September 2, 2024 and sell it today you would earn a total of  261.00  from holding Zurich Insurance Group or generate 8.97% return on investment over 90 days.

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

Zurich Insurance Group  vs.  Athene Holding

Zurich Insurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Athene Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Athene Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Athene Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zurich Insurance and Athene Holding

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

The idea behind Zurich Insurance Group and Athene Holding 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .