Correlation Between Luzerner Kantonalbank and Basler Kantonalbank
Can any of the company-specific risk be diversified away by investing in both Luzerner Kantonalbank and Basler 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 Luzerner Kantonalbank and Basler Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luzerner Kantonalbank AG and Basler Kantonalbank, you can compare the effects of market volatilities on Luzerner Kantonalbank and Basler 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 Luzerner Kantonalbank with a short position of Basler Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luzerner Kantonalbank and Basler Kantonalbank.
Diversification Opportunities for Luzerner Kantonalbank and Basler Kantonalbank
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Luzerner and Basler is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Luzerner Kantonalbank AG and Basler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basler Kantonalbank and Luzerner 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 Luzerner Kantonalbank AG are associated (or correlated) with Basler Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basler Kantonalbank has no effect on the direction of Luzerner Kantonalbank i.e., Luzerner Kantonalbank and Basler Kantonalbank go up and down completely randomly.
Pair Corralation between Luzerner Kantonalbank and Basler Kantonalbank
Assuming the 90 days trading horizon Luzerner Kantonalbank is expected to generate 1.09 times less return on investment than Basler Kantonalbank. In addition to that, Luzerner Kantonalbank is 1.02 times more volatile than Basler Kantonalbank. It trades about 0.16 of its total potential returns per unit of risk. Basler Kantonalbank is currently generating about 0.18 per unit of volatility. If you would invest 6,660 in Basler Kantonalbank on October 26, 2024 and sell it today you would earn a total of 460.00 from holding Basler Kantonalbank or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luzerner Kantonalbank AG vs. Basler Kantonalbank
Performance |
| Timeline |
| Luzerner Kantonalbank |
| Basler Kantonalbank |
Luzerner Kantonalbank and Basler Kantonalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luzerner Kantonalbank and Basler Kantonalbank
The main advantage of trading using opposite Luzerner Kantonalbank and Basler Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luzerner Kantonalbank position performs unexpectedly, Basler 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 Basler Kantonalbank will offset losses from the drop in Basler Kantonalbank's long position.| Luzerner Kantonalbank vs. St Galler Kantonalbank | Luzerner Kantonalbank vs. Banque Cantonale | Luzerner Kantonalbank vs. Berner Kantonalbank AG | Luzerner Kantonalbank vs. Emmi AG |
| Basler Kantonalbank vs. Banque Cantonale | Basler Kantonalbank vs. Berner Kantonalbank AG | Basler Kantonalbank vs. Luzerner Kantonalbank AG | Basler Kantonalbank vs. Banque Cantonale de |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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