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
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between European and Swiss is 0.95. 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 0.96 times more return on investment than Swiss Helvetia. However, European Equity Closed is 1.05 times less risky than Swiss Helvetia. It trades about -0.24 of its potential returns per unit of risk. Swiss Helvetia Closed is currently generating about -0.25 per unit of risk. If you would invest 884.00 in European Equity Closed on August 31, 2024 and sell it today you would lose (38.00) from holding European Equity Closed or give up 4.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Equity Closed vs. Swiss Helvetia Closed
Performance |
| Timeline |
| European Equity Closed |
| Swiss Helvetia Closed |
European Equity and Swiss Helvetia Volatility Contrast
Predicted Return Density |
| Returns |
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.| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Invesco High Income |
| Swiss Helvetia vs. MFS Investment Grade | Swiss Helvetia vs. Eaton Vance Municipal | Swiss Helvetia vs. DTF Tax Free | Swiss Helvetia vs. HUMANA INC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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