Correlation Between Livermore Investments and Zurich Insurance

Can any of the company-specific risk be diversified away by investing in both Livermore Investments 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 Livermore Investments and Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Livermore Investments Group and Zurich Insurance Group, you can compare the effects of market volatilities on Livermore Investments 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 Livermore Investments with a short position of Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livermore Investments and Zurich Insurance.

Diversification Opportunities for Livermore Investments and Zurich Insurance

0.65

Correlation Coefficient

Livermore Investments  Zurich Insurance

Poor diversification

The 3 months correlation between Livermore and Zurich is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Livermore Investments 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 Livermore Investments Group 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 Livermore Investments i.e., Livermore Investments and Zurich Insurance go up and down completely randomly.

Pair Corralation between Livermore Investments and Zurich Insurance

Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 1.85 times more return on investment than Zurich Insurance. However, Livermore Investments is 1.85 times more volatile than Zurich Insurance Group. It trades about 0.3 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.12 per unit of risk. If you would invest  3,553  in Livermore Investments Group on September 21, 2024 and sell it today you would earn a total of  1,047  from holding Livermore Investments Group or generate 29.47% return on investment over 90 days.

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

Livermore Investments Group  vs.  Zurich Insurance Group

Livermore Investments

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Zurich Insurance

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 9 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Livermore Investments and Zurich Insurance

The main advantage of trading using opposite Livermore Investments and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments 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 Livermore Investments Group 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.