Correlation Between Swiss Life and VAT Group
Can any of the company-specific risk be diversified away by investing in both Swiss Life and VAT 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 VAT 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 VAT Group AG, you can compare the effects of market volatilities on Swiss Life and VAT 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 VAT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and VAT Group.
Diversification Opportunities for Swiss Life and VAT Group
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Swiss and VAT is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and VAT Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAT 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 VAT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAT Group AG has no effect on the direction of Swiss Life i.e., Swiss Life and VAT Group go up and down completely randomly.
Pair Corralation between Swiss Life and VAT Group
Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 0.6 times more return on investment than VAT Group. However, Swiss Life Holding is 1.66 times less risky than VAT Group. It trades about 0.11 of its potential returns per unit of risk. VAT Group AG is currently generating about -0.17 per unit of risk. If you would invest 71,760 in Swiss Life Holding on August 25, 2024 and sell it today you would earn a total of 1,600 from holding Swiss Life Holding or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Life Holding vs. VAT Group AG
Performance |
| Timeline |
| Swiss Life Holding |
| VAT Group AG |
Swiss Life and VAT Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Life and VAT Group
The main advantage of trading using opposite Swiss Life and VAT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Life position performs unexpectedly, VAT 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 VAT Group will offset losses from the drop in VAT 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 |
| VAT Group vs. Interroll Holding AG | VAT Group vs. Comet Holding AG | VAT Group vs. Bossard Holding AG | VAT Group vs. Komax Holding 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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