Correlation Between Swiss Leader and IShares Corp
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and IShares Corp 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 Leader and IShares Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Leader Price and iShares Corp Bond, you can compare the effects of market volatilities on Swiss Leader and IShares Corp 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 Leader with a short position of IShares Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and IShares Corp.
Diversification Opportunities for Swiss Leader and IShares Corp
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Swiss and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and iShares Corp Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Corp Bond and Swiss Leader 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 Leader Price are associated (or correlated) with IShares Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Corp Bond has no effect on the direction of Swiss Leader i.e., Swiss Leader and IShares Corp go up and down completely randomly.
Pair Corralation between Swiss Leader and IShares Corp
Assuming the 90 days trading horizon Swiss Leader is expected to generate 1.17 times less return on investment than IShares Corp. In addition to that, Swiss Leader is 2.52 times more volatile than iShares Corp Bond. It trades about 0.06 of its total potential returns per unit of risk. iShares Corp Bond is currently generating about 0.18 per unit of volatility. If you would invest 9,179 in iShares Corp Bond on December 4, 2024 and sell it today you would earn a total of 1,089 from holding iShares Corp Bond or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 47.57% |
| Values | Daily Returns |
Swiss Leader Price vs. iShares Corp Bond
Performance |
| Timeline |
Swiss Leader and IShares Corp Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
iShares Corp Bond
Pair trading matchups for IShares Corp
Pair Trading with Swiss Leader and IShares Corp
The main advantage of trading using opposite Swiss Leader and IShares Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, IShares Corp 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 IShares Corp will offset losses from the drop in IShares Corp's long position.| Swiss Leader vs. Berner Kantonalbank AG | ||
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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