Correlation Between Zurich Insurance and Assicurazioni Generali

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

Diversification Opportunities for Zurich Insurance and Assicurazioni Generali

0.58

Correlation Coefficient

Zurich Insurance  Assicurazioni Generali

Very weak diversification

The 3 months correlation between Zurich and Assicurazioni is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali 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 Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Assicurazioni Generali go up and down completely randomly.

Pair Corralation between Zurich Insurance and Assicurazioni Generali

Assuming the 90 days horizon Zurich Insurance Group is expected to generate 1.21 times more return on investment than Assicurazioni Generali. However, Zurich Insurance is 1.21 times more volatile than Assicurazioni Generali SpA. It trades about 0.04 of its potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.01 per unit of risk. If you would invest  59,826  in Zurich Insurance Group on September 19, 2024 and sell it today you would earn a total of  1,674  from holding Zurich Insurance Group or generate 2.8% 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.  Assicurazioni Generali SpA

Zurich Insurance

Risk-Adjusted Performance

2 of 100

Insignificant

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.

Assicurazioni Generali

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Assicurazioni Generali is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zurich Insurance and Assicurazioni Generali

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

The idea behind Zurich Insurance Group and Assicurazioni Generali SpA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.