Correlation Between Swiss Life and Roche Holding
Can any of the company-specific risk be diversified away by investing in both Swiss Life and Roche 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 Swiss Life and Roche Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Life Holding and Roche Holding AG, you can compare the effects of market volatilities on Swiss Life and Roche 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 Swiss Life with a short position of Roche Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and Roche Holding.
Diversification Opportunities for Swiss Life and Roche Holding
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Swiss and Roche is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Roche Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding AG and Swiss Life 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 Swiss Life Holding are associated (or correlated) with Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding AG has no effect on the direction of Swiss Life i.e., Swiss Life and Roche Holding go up and down completely randomly.
Pair Corralation between Swiss Life and Roche Holding
Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 0.86 times more return on investment than Roche Holding. However, Swiss Life Holding is 1.17 times less risky than Roche Holding. It trades about 0.03 of its potential returns per unit of risk. Roche Holding AG is currently generating about -0.34 per unit of risk. If you would invest 71,760 in Swiss Life Holding on August 30, 2024 and sell it today you would earn a total of 400.00 from holding Swiss Life Holding or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Life Holding vs. Roche Holding AG
Performance |
| Timeline |
| Swiss Life Holding |
| Roche Holding AG |
Swiss Life and Roche Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Life and Roche Holding
The main advantage of trading using opposite Swiss Life and Roche Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Life position performs unexpectedly, Roche 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 Roche Holding will offset losses from the drop in Roche Holding's long position.| Swiss Life vs. Swiss Re AG | Swiss Life vs. Novartis AG | Swiss Life vs. UBS Group AG | Swiss Life vs. Roche Holding AG |
| Roche Holding vs. Nestl SA | Roche Holding vs. Zurich Insurance Group | Roche Holding vs. Swiss Re AG | Roche Holding vs. UBS Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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