Correlation Between Swiss Leader and Swiss Re
Can any of the company-specific risk be diversified away by investing in both Swiss Leader 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 Leader 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 Leader Price and Swiss Re AG, you can compare the effects of market volatilities on Swiss Leader 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 Leader with a short position of Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and Swiss Re.
Diversification Opportunities for Swiss Leader and Swiss Re
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Swiss and Swiss is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and Swiss Re AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re AG and Swiss Leader 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 Leader Price 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 AG has no effect on the direction of Swiss Leader i.e., Swiss Leader and Swiss Re go up and down completely randomly.
Pair Corralation between Swiss Leader and Swiss Re
Assuming the 90 days trading horizon Swiss Leader Price is expected to generate 0.55 times more return on investment than Swiss Re. However, Swiss Leader Price is 1.81 times less risky than Swiss Re. It trades about -0.14 of its potential returns per unit of risk. Swiss Re AG is currently generating about -0.1 per unit of risk. If you would invest 189,761 in Swiss Leader Price on February 7, 2024 and sell it today you would lose (4,001) from holding Swiss Leader Price or give up 2.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.24% |
Values | Daily Returns |
Swiss Leader Price vs. Swiss Re AG
Performance |
Timeline |
Swiss Leader and Swiss Re Volatility Contrast
Predicted Return Density |
Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
Swiss Re AG
Pair trading matchups for Swiss Re
Pair Trading with Swiss Leader and Swiss Re
The main advantage of trading using opposite Swiss Leader and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader 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.Swiss Leader vs. Swiss Steel Holding | Swiss Leader vs. St Galler Kantonalbank | Swiss Leader vs. Basler Kantonalbank | Swiss Leader vs. Graubuendner Kantonalbank |
Swiss Re vs. Zurich Insurance Group | Swiss Re vs. Swiss Life Holding | Swiss Re vs. Novartis AG | Swiss Re vs. UBS Group AG |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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