Correlation Between SWISS WATER and BlueScope Steel
Can any of the company-specific risk be diversified away by investing in both SWISS WATER and BlueScope Steel 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 WATER and BlueScope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and BlueScope Steel Limited, you can compare the effects of market volatilities on SWISS WATER and BlueScope Steel 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 WATER with a short position of BlueScope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and BlueScope Steel.
Diversification Opportunities for SWISS WATER and BlueScope Steel
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SWISS and BlueScope is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and BlueScope Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel and SWISS WATER 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 WATER DECAFFCOFFEE are associated (or correlated) with BlueScope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueScope Steel has no effect on the direction of SWISS WATER i.e., SWISS WATER and BlueScope Steel go up and down completely randomly.
Pair Corralation between SWISS WATER and BlueScope Steel
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to generate 1.31 times more return on investment than BlueScope Steel. However, SWISS WATER is 1.31 times more volatile than BlueScope Steel Limited. It trades about 0.04 of its potential returns per unit of risk. BlueScope Steel Limited is currently generating about 0.03 per unit of risk. If you would invest 208.00 in SWISS WATER DECAFFCOFFEE on August 31, 2024 and sell it today you would earn a total of 60.00 from holding SWISS WATER DECAFFCOFFEE or generate 28.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. BlueScope Steel Limited
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| BlueScope Steel |
SWISS WATER and BlueScope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and BlueScope Steel
The main advantage of trading using opposite SWISS WATER and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER position performs unexpectedly, BlueScope Steel 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 BlueScope Steel will offset losses from the drop in BlueScope Steel's long position.| SWISS WATER vs. Pure Storage | SWISS WATER vs. DICKER DATA LTD | SWISS WATER vs. DATANG INTL POW | SWISS WATER vs. Public Storage |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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