Correlation Between Zurich Insurance and TR Property

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

Diversification Opportunities for Zurich Insurance and TR Property

-0.65

Correlation Coefficient

Zurich Insurance  TR Property

Excellent diversification

The 3 months correlation between Zurich and TRY is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and TR Property Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TR Property Investment 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 TR Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TR Property Investment has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and TR Property go up and down completely randomly.

Pair Corralation between Zurich Insurance and TR Property

Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.64 times more return on investment than TR Property. However, Zurich Insurance Group is 1.55 times less risky than TR Property. It trades about 0.24 of its potential returns per unit of risk. TR Property Investment is currently generating about -0.07 per unit of risk. If you would invest  49,640  in Zurich Insurance Group on September 3, 2024 and sell it today you would earn a total of  5,780  from holding Zurich Insurance Group or generate 11.64% return on investment over 90 days.

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

Zurich Insurance Group  vs.  TR Property Investment

Zurich Insurance

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TR Property Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TR Property Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TR Property 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 TR Property

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

The idea behind Zurich Insurance Group and TR Property Investment 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.