Correlation Between Swiss Re and Swiss Re
Can any of the company-specific risk be diversified away by investing in both Swiss Re and Swiss Re 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 Swiss Re 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 Swiss Re, you can compare the effects of market volatilities on Swiss Re and Swiss Re 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 Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and Swiss Re.
Diversification Opportunities for Swiss Re and Swiss Re
Poor diversification
The 3 months correlation between Swiss and Swiss is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG and Swiss Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re 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 Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re has no effect on the direction of Swiss Re i.e., Swiss Re and Swiss Re go up and down completely randomly.
Pair Corralation between Swiss Re and Swiss Re
Assuming the 90 days horizon Swiss Re AG is expected to generate 2.77 times more return on investment than Swiss Re. However, Swiss Re is 2.77 times more volatile than Swiss Re. It trades about -0.11 of its potential returns per unit of risk. Swiss Re is currently generating about -0.5 per unit of risk. If you would invest 12,263 in Swiss Re AG on January 19, 2024 and sell it today you would lose (1,463) from holding Swiss Re AG or give up 11.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Swiss Re AG vs. Swiss Re
Performance |
| Timeline |
| Swiss Re AG |
| Swiss Re |
Swiss Re and Swiss Re Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Re and Swiss Re
The main advantage of trading using opposite Swiss Re and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Re position performs unexpectedly, Swiss Re 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 Swiss Re will offset losses from the drop in Swiss Re's long position.The idea behind Swiss Re AG and Swiss Re 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.| Swiss Re vs. Pfizer Inc | Swiss Re vs. Heartland Financial USA | Swiss Re vs. Conflux Network | Swiss Re vs. Citigroup Capital XIII |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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