Correlation Between Athene Holding and Zurich Insurance

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

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

Diversification Opportunities for Athene Holding and Zurich Insurance

0.56

Correlation Coefficient

Athene Holding  Zurich Insurance

Very weak diversification

The 3 months correlation between Athene and Zurich is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Athene Holding and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance and Athene Holding 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 Athene Holding 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 Athene Holding i.e., Athene Holding and Zurich Insurance go up and down completely randomly.

Pair Corralation between Athene Holding and Zurich Insurance

Assuming the 90 days trading horizon Athene Holding is expected to under-perform the Zurich Insurance. But the preferred stock apears to be less risky and, when comparing its historical volatility, Athene Holding is 2.1 times less risky than Zurich Insurance. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Zurich Insurance Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  54,900  in Zurich Insurance Group on March 14, 2024 and sell it today you would lose (1,400) from holding Zurich Insurance Group or give up 2.55% of portfolio value over 90 days.

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

Athene Holding  vs.  Zurich Insurance Group

Athene Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athene Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Athene Holding is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Zurich Insurance

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Zurich Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Athene Holding and Zurich Insurance

The main advantage of trading using opposite Athene Holding and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athene Holding 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 Athene Holding 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.