Correlation Between Nestl SA and Zuger Kantonalbank
Can any of the company-specific risk be diversified away by investing in both Nestl SA and Zuger 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 Nestl SA and Zuger Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestl SA and Zuger Kantonalbank, you can compare the effects of market volatilities on Nestl SA and Zuger 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 Nestl SA with a short position of Zuger Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestl SA and Zuger Kantonalbank.
Diversification Opportunities for Nestl SA and Zuger Kantonalbank
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nestl and Zuger is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nestl SA and Zuger Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zuger Kantonalbank and Nestl SA 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 Nestl SA are associated (or correlated) with Zuger Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zuger Kantonalbank has no effect on the direction of Nestl SA i.e., Nestl SA and Zuger Kantonalbank go up and down completely randomly.
Pair Corralation between Nestl SA and Zuger Kantonalbank
Assuming the 90 days trading horizon Nestl SA is expected to under-perform the Zuger Kantonalbank. In addition to that, Nestl SA is 1.94 times more volatile than Zuger Kantonalbank. It trades about -0.41 of its total potential returns per unit of risk. Zuger Kantonalbank is currently generating about -0.05 per unit of volatility. If you would invest 824,000 in Zuger Kantonalbank on September 2, 2024 and sell it today you would lose (4,000) from holding Zuger Kantonalbank or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestl SA vs. Zuger Kantonalbank
Performance |
| Timeline |
| Nestl SA |
| Zuger Kantonalbank |
Nestl SA and Zuger Kantonalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestl SA and Zuger Kantonalbank
The main advantage of trading using opposite Nestl SA and Zuger Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestl SA position performs unexpectedly, Zuger 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 Zuger Kantonalbank will offset losses from the drop in Zuger Kantonalbank's long position.| Nestl SA vs. Novartis AG | Nestl SA vs. Roche Holding AG | Nestl SA vs. Zurich Insurance Group | Nestl SA vs. Swiss Re AG |
| Zuger Kantonalbank vs. Banque Cantonale | Zuger Kantonalbank vs. St Galler Kantonalbank | Zuger Kantonalbank vs. PSP Swiss Property | Zuger Kantonalbank vs. Berner Kantonalbank 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |