Correlation Between European Equity and Swiss Helvetia

Can any of the company-specific risk be diversified away by investing in both European Equity and Swiss Helvetia 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 European Equity and Swiss Helvetia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between European Equity Closed and Swiss Helvetia Closed, you can compare the effects of market volatilities on European Equity and Swiss Helvetia 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 European Equity with a short position of Swiss Helvetia. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Equity and Swiss Helvetia.

Diversification Opportunities for European Equity and Swiss Helvetia

-0.28

Correlation Coefficient

European Equity  Swiss Helvetia

Very good diversification

The 3 months correlation between European and Swiss is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and Swiss Helvetia Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Helvetia Closed and European Equity 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 European Equity Closed are associated (or correlated) with Swiss Helvetia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Helvetia Closed has no effect on the direction of European Equity i.e., European Equity and Swiss Helvetia go up and down completely randomly.

Pair Corralation between European Equity and Swiss Helvetia

Considering the 90-day investment horizon European Equity Closed is expected to generate 1.09 times more return on investment than Swiss Helvetia. However, European Equity is 1.09 times more volatile than Swiss Helvetia Closed. It trades about 0.08 of its potential returns per unit of risk. Swiss Helvetia Closed is currently generating about -0.14 per unit of risk. If you would invest  972.00  in European Equity Closed on May 5, 2025 and sell it today you would earn a total of  32.00  from holding European Equity Closed or generate 3.29% return on investment over 90 days.

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

European Equity Closed  vs.  Swiss Helvetia Closed

European Equity Closed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in European Equity Closed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, European Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Swiss Helvetia Closed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swiss Helvetia Closed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Swiss Helvetia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with European Equity and Swiss Helvetia

The main advantage of trading using opposite European Equity and Swiss Helvetia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Equity position performs unexpectedly, Swiss Helvetia 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 Helvetia will offset losses from the drop in Swiss Helvetia's long position.

The idea behind European Equity Closed and Swiss Helvetia Closed 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.