Correlation Between Swiss Leader and Vanguard
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and Vanguard 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 Vanguard 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 Vanguard SP 500, you can compare the effects of market volatilities on Swiss Leader and Vanguard 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 Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and Vanguard.
Diversification Opportunities for Swiss Leader and Vanguard
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Swiss and Vanguard is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 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 Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of Swiss Leader i.e., Swiss Leader and Vanguard go up and down completely randomly.
Pair Corralation between Swiss Leader and Vanguard
Assuming the 90 days trading horizon Swiss Leader Price is expected to under-perform the Vanguard. But the index apears to be less risky and, when comparing its historical volatility, Swiss Leader Price is 1.34 times less risky than Vanguard. The index trades about -0.16 of its potential returns per unit of risk. The Vanguard SP 500 is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 9,570 in Vanguard SP 500 on August 28, 2024 and sell it today you would earn a total of 512.00 from holding Vanguard SP 500 or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Leader Price vs. Vanguard SP 500
Performance |
| Timeline |
Swiss Leader and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
Vanguard SP 500
Pair trading matchups for Vanguard
Pair Trading with Swiss Leader and Vanguard
The main advantage of trading using opposite Swiss Leader and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, Vanguard 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 Vanguard will offset losses from the drop in Vanguard's long position.| Swiss Leader vs. Liechtensteinische Landesbank AG | Swiss Leader vs. BB Biotech AG | Swiss Leader vs. Luzerner Kantonalbank AG | Swiss Leader vs. Swiss Steel Holding |
| Vanguard vs. Vanguard FTSE Emerging | Vanguard vs. Vanguard USD Emerging | Vanguard vs. Vanguard FTSE Developed | Vanguard vs. Vanguard FTSE Japan |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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