Correlation Between Swiss Leader and Swatch Group
Can any of the company-specific risk be diversified away by investing in both Swiss Leader 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 Leader 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 Leader Price and Swatch Group AG, you can compare the effects of market volatilities on Swiss Leader 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 Leader with a short position of Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and Swatch Group.
Diversification Opportunities for Swiss Leader and Swatch Group
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swiss and Swatch is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price 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 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 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 Leader i.e., Swiss Leader and Swatch Group go up and down completely randomly.
Pair Corralation between Swiss Leader and Swatch Group
Assuming the 90 days trading horizon Swiss Leader Price is expected to generate 0.44 times more return on investment than Swatch Group. However, Swiss Leader Price is 2.26 times less risky than Swatch Group. It trades about 0.04 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 170,804 in Swiss Leader Price on September 3, 2024 and sell it today you would earn a total of 23,252 from holding Swiss Leader Price or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Swiss Leader Price vs. Swatch Group AG
Performance |
| Timeline |
Swiss Leader and Swatch Group Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
Swatch Group AG
Pair trading matchups for Swatch Group
Pair Trading with Swiss Leader and Swatch Group
The main advantage of trading using opposite Swiss Leader and Swatch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader 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 Leader vs. VP Bank AG | Swiss Leader vs. Basler Kantonalbank | Swiss Leader vs. Thurgauer Kantonalbank | Swiss Leader vs. Liechtensteinische Landesbank 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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