Correlation Between Swiss Life and Swatch Group
Can any of the company-specific risk be diversified away by investing in both Swiss Life and Swatch Group 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 Swatch Group 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 Swatch Group AG, you can compare the effects of market volatilities on Swiss Life and Swatch Group 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 Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and Swatch Group.
Diversification Opportunities for Swiss Life and Swatch Group
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Swiss and Swatch is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Swatch Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group 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 Swatch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group AG has no effect on the direction of Swiss Life i.e., Swiss Life and Swatch Group go up and down completely randomly.
Pair Corralation between Swiss Life and Swatch Group
Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 0.66 times more return on investment than Swatch Group. However, Swiss Life Holding is 1.53 times less risky than Swatch Group. It trades about 0.09 of its potential returns per unit of risk. Swatch Group AG is currently generating about -0.04 per unit of risk. If you would invest 44,531 in Swiss Life Holding on September 4, 2024 and sell it today you would earn a total of 27,909 from holding Swiss Life Holding or generate 62.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Life Holding vs. Swatch Group AG
Performance |
| Timeline |
| Swiss Life Holding |
| Swatch Group AG |
Swiss Life and Swatch Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Life and Swatch Group
The main advantage of trading using opposite Swiss Life and Swatch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Life position performs unexpectedly, Swatch Group 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 Swatch Group will offset losses from the drop in Swatch Group's long position.| Swiss Life vs. Zurich Insurance Group | Swiss Life vs. Swiss Re AG | Swiss Life vs. Swisscom AG | Swiss Life vs. Lonza Group AG |
| Swatch Group vs. Compagnie Financire Richemont | Swatch Group vs. Swiss Life Holding | Swatch Group vs. Swisscom AG | Swatch Group vs. Swiss Re 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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