Correlation Between Geberit AG and BVZ Holding
Can any of the company-specific risk be diversified away by investing in both Geberit AG and BVZ Holding 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 Geberit AG and BVZ Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geberit AG and BVZ Holding AG, you can compare the effects of market volatilities on Geberit AG and BVZ Holding 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 Geberit AG with a short position of BVZ Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geberit AG and BVZ Holding.
Diversification Opportunities for Geberit AG and BVZ Holding
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Geberit and BVZ is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Geberit AG and BVZ Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BVZ Holding AG and Geberit AG 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 Geberit AG are associated (or correlated) with BVZ Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BVZ Holding AG has no effect on the direction of Geberit AG i.e., Geberit AG and BVZ Holding go up and down completely randomly.
Pair Corralation between Geberit AG and BVZ Holding
Assuming the 90 days trading horizon Geberit AG is expected to generate 1.21 times more return on investment than BVZ Holding. However, Geberit AG is 1.21 times more volatile than BVZ Holding AG. It trades about 0.16 of its potential returns per unit of risk. BVZ Holding AG is currently generating about -0.03 per unit of risk. If you would invest 52,940 in Geberit AG on September 6, 2024 and sell it today you would earn a total of 2,060 from holding Geberit AG or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.61% |
| Values | Daily Returns |
Geberit AG vs. BVZ Holding AG
Performance |
| Timeline |
| Geberit AG |
| BVZ Holding AG |
Geberit AG and BVZ Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geberit AG and BVZ Holding
The main advantage of trading using opposite Geberit AG and BVZ Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geberit AG position performs unexpectedly, BVZ Holding 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 BVZ Holding will offset losses from the drop in BVZ Holding's long position.The idea behind Geberit AG and BVZ Holding AG 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.| BVZ Holding vs. Jungfraubahn Holding AG | BVZ Holding vs. Daetwyl I | BVZ Holding vs. Also Holding AG | BVZ Holding vs. Emmi AG |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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