Correlation Between Freedom Bank and Swiss Re
Can any of the company-specific risk be diversified away by investing in both Freedom Bank 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 Freedom Bank and Swiss Re into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and Swiss Re, you can compare the effects of market volatilities on Freedom Bank 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 Freedom Bank with a short position of Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Swiss Re.
Diversification Opportunities for Freedom Bank and Swiss Re
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Freedom and Swiss is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Swiss Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re and Freedom Bank 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 Freedom Bank of 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 has no effect on the direction of Freedom Bank i.e., Freedom Bank and Swiss Re go up and down completely randomly.
Pair Corralation between Freedom Bank and Swiss Re
Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Swiss Re. But the otc stock apears to be less risky and, when comparing its historical volatility, Freedom Bank of is 1.09 times less risky than Swiss Re. The otc stock trades about -0.05 of its potential returns per unit of risk. The Swiss Re is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,066 in Swiss Re on September 12, 2024 and sell it today you would earn a total of 1,654 from holding Swiss Re or generate 80.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.98% |
| Values | Daily Returns |
Freedom Bank of vs. Swiss Re
Performance |
| Timeline |
| Freedom Bank |
| Swiss Re |
Freedom Bank and Swiss Re Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Swiss Re
The main advantage of trading using opposite Freedom Bank and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank 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.| Freedom Bank vs. HUMANA INC | Freedom Bank vs. Barloworld Ltd ADR | Freedom Bank vs. Morningstar Unconstrained Allocation | Freedom Bank vs. Thrivent High Yield |
| Swiss Re vs. Freedom Bank of | Swiss Re vs. HUMANA INC | Swiss Re vs. Barloworld Ltd ADR | Swiss Re vs. Morningstar Unconstrained Allocation |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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