Correlation Between Swiss Leader and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and SPDR SP 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 SPDR SP 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 SPDR SP Utilities, you can compare the effects of market volatilities on Swiss Leader and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and SPDR SP.
Diversification Opportunities for Swiss Leader and SPDR SP
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Swiss and SPDR is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and SPDR SP Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Utilities 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Utilities has no effect on the direction of Swiss Leader i.e., Swiss Leader and SPDR SP go up and down completely randomly.
Pair Corralation between Swiss Leader and SPDR SP
Assuming the 90 days trading horizon Swiss Leader is expected to generate 2.79 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Swiss Leader Price is 1.39 times less risky than SPDR SP. It trades about 0.04 of its potential returns per unit of risk. SPDR SP Utilities is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,867 in SPDR SP Utilities on August 31, 2024 and sell it today you would earn a total of 1,162 from holding SPDR SP Utilities or generate 30.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Swiss Leader Price vs. SPDR SP Utilities
Performance |
| Timeline |
Swiss Leader and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
SPDR SP Utilities
Pair trading matchups for SPDR SP
Pair Trading with Swiss Leader and SPDR SP
The main advantage of trading using opposite Swiss Leader and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Swiss Leader vs. Graubuendner Kantonalbank | Swiss Leader vs. Adval Tech Holding | Swiss Leader vs. Luzerner Kantonalbank AG | Swiss Leader vs. Zurich Insurance Group |
| SPDR SP vs. SPDR MSCI Europe | SPDR SP vs. SPDR MSCI Europe | SPDR SP vs. SPDR MSCI EM | SPDR SP vs. SPDR Bloomberg Global |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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