Correlation Between Swiss Re and Best Buy
Can any of the company-specific risk be diversified away by investing in both Swiss Re and Best Buy 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 Swiss Re and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Re AG and Best Buy Co, you can compare the effects of market volatilities on Swiss Re and Best Buy 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 Swiss Re with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and Best Buy.
Diversification Opportunities for Swiss Re and Best Buy
Very weak diversification
The 3 months correlation between Swiss and Best is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Swiss Re 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 Swiss Re AG are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Swiss Re i.e., Swiss Re and Best Buy go up and down completely randomly.
Pair Corralation between Swiss Re and Best Buy
Assuming the 90 days horizon Swiss Re AG is expected to under-perform the Best Buy. In addition to that, Swiss Re is 2.45 times more volatile than Best Buy Co. It trades about -0.01 of its total potential returns per unit of risk. Best Buy Co is currently generating about 0.0 per unit of volatility. If you would invest 7,553 in Best Buy Co on January 27, 2024 and sell it today you would lose (48.00) from holding Best Buy Co or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Re AG vs. Best Buy Co
Performance |
| Timeline |
| Swiss Re AG |
| Best Buy |
Swiss Re and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Re and Best Buy
The main advantage of trading using opposite Swiss Re and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Re position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.The idea behind Swiss Re AG and Best Buy Co 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.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 the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |