Correlation Between AXA SA and Zurich Insurance

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Can any of the company-specific risk be diversified away by investing in both AXA SA and Zurich Insurance 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 AXA SA and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXA SA and Zurich Insurance Group, you can compare the effects of market volatilities on AXA SA and Zurich Insurance 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 AXA SA with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and Zurich Insurance.

Diversification Opportunities for AXA SA and Zurich Insurance

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between AXA and Zurich is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and AXA SA 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 AXA SA are associated (or correlated) with Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of AXA SA i.e., AXA SA and Zurich Insurance go up and down completely randomly.

Pair Corralation between AXA SA and Zurich Insurance

Assuming the 90 days horizon AXA SA is expected to under-perform the Zurich Insurance. In addition to that, AXA SA is 1.01 times more volatile than Zurich Insurance Group. It trades about -0.01 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.09 per unit of volatility. If you would invest  59,500  in Zurich Insurance Group on September 19, 2024 and sell it today you would earn a total of  2,000  from holding Zurich Insurance Group or generate 3.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AXA SA  vs.  Zurich Insurance Group

 Performance 
       Timeline  
AXA SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Zurich Insurance 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Zurich Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AXA SA and Zurich Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AXA SA and Zurich Insurance

The main advantage of trading using opposite AXA SA and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA SA position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance's long position.
The idea behind AXA SA and Zurich Insurance Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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