Correlation Between Absa Group and Schweizerische Nationalbank
Can any of the company-specific risk be diversified away by investing in both Absa Group and Schweizerische Nationalbank 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 Absa Group and Schweizerische Nationalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group Limited and Schweizerische Nationalbank, you can compare the effects of market volatilities on Absa Group and Schweizerische Nationalbank 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 Absa Group with a short position of Schweizerische Nationalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and Schweizerische Nationalbank.
Diversification Opportunities for Absa Group and Schweizerische Nationalbank
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Absa and Schweizerische is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Limited and Schweizerische Nationalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweizerische Nationalbank and Absa Group 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 Absa Group Limited are associated (or correlated) with Schweizerische Nationalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweizerische Nationalbank has no effect on the direction of Absa Group i.e., Absa Group and Schweizerische Nationalbank go up and down completely randomly.
Pair Corralation between Absa Group and Schweizerische Nationalbank
Assuming the 90 days horizon Absa Group Limited is expected to generate 0.36 times more return on investment than Schweizerische Nationalbank. However, Absa Group Limited is 2.78 times less risky than Schweizerische Nationalbank. It trades about 0.13 of its potential returns per unit of risk. Schweizerische Nationalbank is currently generating about -0.09 per unit of risk. If you would invest 772.00 in Absa Group Limited on August 29, 2024 and sell it today you would earn a total of 39.00 from holding Absa Group Limited or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absa Group Limited vs. Schweizerische Nationalbank
Performance |
| Timeline |
| Absa Group Limited |
| Schweizerische Nationalbank |
Absa Group and Schweizerische Nationalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absa Group and Schweizerische Nationalbank
The main advantage of trading using opposite Absa Group and Schweizerische Nationalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group position performs unexpectedly, Schweizerische Nationalbank 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 Schweizerische Nationalbank will offset losses from the drop in Schweizerische Nationalbank's long position.The idea behind Absa Group Limited and Schweizerische Nationalbank 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.| Schweizerische Nationalbank vs. Israel Discount Bank | Schweizerische Nationalbank vs. Baraboo Bancorporation | Schweizerische Nationalbank vs. Danske Bank AS | Schweizerische Nationalbank vs. Jyske Bank AS |
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
| CEOs Directory Screen CEOs from public companies around the world | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |