Correlation Between Graubuendner Kantonalbank and Berner Kantonalbank
Can any of the company-specific risk be diversified away by investing in both Graubuendner Kantonalbank and Berner Kantonalbank 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 Graubuendner Kantonalbank and Berner Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graubuendner Kantonalbank and Berner Kantonalbank AG, you can compare the effects of market volatilities on Graubuendner Kantonalbank and Berner Kantonalbank 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 Graubuendner Kantonalbank with a short position of Berner Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graubuendner Kantonalbank and Berner Kantonalbank.
Diversification Opportunities for Graubuendner Kantonalbank and Berner Kantonalbank
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Graubuendner and Berner is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Graubuendner Kantonalbank and Berner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berner Kantonalbank and Graubuendner Kantonalbank 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 Graubuendner Kantonalbank are associated (or correlated) with Berner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berner Kantonalbank has no effect on the direction of Graubuendner Kantonalbank i.e., Graubuendner Kantonalbank and Berner Kantonalbank go up and down completely randomly.
Pair Corralation between Graubuendner Kantonalbank and Berner Kantonalbank
Assuming the 90 days trading horizon Graubuendner Kantonalbank is expected to generate 2.19 times less return on investment than Berner Kantonalbank. In addition to that, Graubuendner Kantonalbank is 1.07 times more volatile than Berner Kantonalbank AG. It trades about 0.16 of its total potential returns per unit of risk. Berner Kantonalbank AG is currently generating about 0.37 per unit of volatility. If you would invest 23,500 in Berner Kantonalbank AG on October 26, 2024 and sell it today you would earn a total of 800.00 from holding Berner Kantonalbank AG or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Graubuendner Kantonalbank vs. Berner Kantonalbank AG
Performance |
| Timeline |
| Graubuendner Kantonalbank |
| Berner Kantonalbank |
Graubuendner Kantonalbank and Berner Kantonalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graubuendner Kantonalbank and Berner Kantonalbank
The main advantage of trading using opposite Graubuendner Kantonalbank and Berner Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graubuendner Kantonalbank position performs unexpectedly, Berner Kantonalbank 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 Berner Kantonalbank will offset losses from the drop in Berner Kantonalbank's long position.The idea behind Graubuendner Kantonalbank and Berner Kantonalbank 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.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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