Correlation Between Zurich Insurance and ANSYS

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

Diversification Opportunities for Zurich Insurance and ANSYS

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Zurich and ANSYS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and ANSYS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANSYS Inc 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 ANSYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANSYS Inc has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and ANSYS go up and down completely randomly.

Pair Corralation between Zurich Insurance and ANSYS

Assuming the 90 days horizon Zurich Insurance is expected to generate 1.75 times less return on investment than ANSYS. But when comparing it to its historical volatility, Zurich Insurance Group is 3.72 times less risky than ANSYS. It trades about 0.62 of its potential returns per unit of risk. ANSYS Inc is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  21,391  in ANSYS Inc on September 5, 2022 and sell it today you would earn a total of  4,283  from holding ANSYS Inc or generate 20.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Zurich Insurance Group  vs.  ANSYS Inc

 Performance (%) 
       Timeline  
Zurich Insurance 
Zurich Performance
9 of 100
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 fairly sluggish basic indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Zurich Price Channel

ANSYS Inc 
ANSYS Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ANSYS Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, ANSYS may actually be approaching a critical reversion point that can send shares even higher in January 2023.

ANSYS Price Channel

Zurich Insurance and ANSYS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zurich Insurance and ANSYS

The main advantage of trading using opposite Zurich Insurance and ANSYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurich Insurance position performs unexpectedly, ANSYS 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 ANSYS will offset losses from the drop in ANSYS's long position.
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The idea behind Zurich Insurance Group and ANSYS Inc 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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Check out your portfolio center. 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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