Correlation Between ZENITH BANK and UNIVERSAL INSURANCE

Can any of the company-specific risk be diversified away by investing in both ZENITH BANK and UNIVERSAL 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 ZENITH BANK and UNIVERSAL INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ZENITH BANK PLC and UNIVERSAL INSURANCE PANY, you can compare the effects of market volatilities on ZENITH BANK and UNIVERSAL 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 ZENITH BANK with a short position of UNIVERSAL INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZENITH BANK and UNIVERSAL INSURANCE.

Diversification Opportunities for ZENITH BANK and UNIVERSAL INSURANCE

0.91

Correlation Coefficient

ZENITH BANK  UNIVERSAL INSURANCE

Almost no diversification

The 3 months correlation between ZENITH and UNIVERSAL is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ZENITH BANK PLC and UNIVERSAL INSURANCE PANY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL INSURANCE PANY and ZENITH BANK 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 ZENITH BANK PLC are associated (or correlated) with UNIVERSAL INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL INSURANCE PANY has no effect on the direction of ZENITH BANK i.e., ZENITH BANK and UNIVERSAL INSURANCE go up and down completely randomly.

Pair Corralation between ZENITH BANK and UNIVERSAL INSURANCE

Assuming the 90 days trading horizon ZENITH BANK PLC is expected to generate 0.67 times more return on investment than UNIVERSAL INSURANCE. However, ZENITH BANK PLC is 1.48 times less risky than UNIVERSAL INSURANCE. It trades about 0.3 of its potential returns per unit of risk. UNIVERSAL INSURANCE PANY is currently generating about 0.14 per unit of risk. If you would invest  4,695  in ZENITH BANK PLC on May 5, 2025 and sell it today you would earn a total of  2,955  from holding ZENITH BANK PLC or generate 62.94% return on investment over 90 days.

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

ZENITH BANK PLC  vs.  UNIVERSAL INSURANCE PANY

ZENITH BANK PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ZENITH BANK PLC are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ZENITH BANK sustained solid returns over the last few months and may actually be approaching a breakup point.

UNIVERSAL INSURANCE PANY

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVERSAL INSURANCE PANY are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UNIVERSAL INSURANCE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZENITH BANK and UNIVERSAL INSURANCE

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

The idea behind ZENITH BANK PLC and UNIVERSAL INSURANCE PANY 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.