Correlation Between Zurich Insurance and Vaudoise Assurances

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

Diversification Opportunities for Zurich Insurance and Vaudoise Assurances

0.84

Correlation Coefficient

Zurich Insurance  Vaudoise Assurances

Very poor diversification

The 3 months correlation between Zurich and Vaudoise is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Vaudoise Assurances Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaudoise Assurances 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 Vaudoise Assurances. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaudoise Assurances has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Vaudoise Assurances go up and down completely randomly.

Pair Corralation between Zurich Insurance and Vaudoise Assurances

Assuming the 90 days trading horizon Zurich Insurance Group is expected to generate 0.86 times more return on investment than Vaudoise Assurances. However, Zurich Insurance Group is 1.16 times less risky than Vaudoise Assurances. It trades about 0.05 of its potential returns per unit of risk. Vaudoise Assurances Holding is currently generating about -0.02 per unit of risk. If you would invest  55,660  in Zurich Insurance Group on July 31, 2025 and sell it today you would earn a total of  1,640  from holding Zurich Insurance Group or generate 2.95% return on investment over 90 days.

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

Zurich Insurance Group  vs.  Vaudoise Assurances Holding

Zurich Insurance

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Zurich Insurance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Vaudoise Assurances

Risk-Adjusted Performance

Weakest

Over the last 90 days Vaudoise Assurances Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vaudoise Assurances is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Zurich Insurance and Vaudoise Assurances

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

The idea behind Zurich Insurance Group and Vaudoise Assurances Holding 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..