Correlation Between Swiss Life and Zuger Kantonalbank
Can any of the company-specific risk be diversified away by investing in both Swiss Life 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 Swiss Life and Zuger Kantonalbank 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 Zuger Kantonalbank, you can compare the effects of market volatilities on Swiss Life 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 Swiss Life with a short position of Zuger Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and Zuger Kantonalbank.
Diversification Opportunities for Swiss Life and Zuger Kantonalbank
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Swiss and Zuger is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Zuger Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zuger Kantonalbank 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 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 Swiss Life i.e., Swiss Life and Zuger Kantonalbank go up and down completely randomly.
Pair Corralation between Swiss Life and Zuger Kantonalbank
Assuming the 90 days trading horizon Swiss Life Holding is expected to under-perform the Zuger Kantonalbank. In addition to that, Swiss Life is 2.85 times more volatile than Zuger Kantonalbank. It trades about -0.1 of its total potential returns per unit of risk. Zuger Kantonalbank is currently generating about -0.07 per unit of volatility. If you would invest 820,000 in Zuger Kantonalbank on September 5, 2024 and sell it today you would lose (6,000) from holding Zuger Kantonalbank or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Swiss Life Holding vs. Zuger Kantonalbank
Performance |
| Timeline |
| Swiss Life Holding |
| Zuger Kantonalbank |
Swiss Life and Zuger Kantonalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Life and Zuger Kantonalbank
The main advantage of trading using opposite Swiss Life and Zuger Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Life 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.| Swiss Life vs. Swiss Re AG | Swiss Life vs. Swisscom AG | Swiss Life vs. Lonza Group AG | Swiss Life vs. Novartis AG |
| Zuger Kantonalbank vs. Helvetia Holding AG | Zuger Kantonalbank vs. Swiss Life Holding | Zuger Kantonalbank vs. Baloise Holding AG | Zuger Kantonalbank vs. Logitech International SA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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