Correlation Between Swiss Leader and ZKB Gold
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and ZKB Gold 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 ZKB Gold 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 ZKB Gold ETF, you can compare the effects of market volatilities on Swiss Leader and ZKB Gold 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 ZKB Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and ZKB Gold.
Diversification Opportunities for Swiss Leader and ZKB Gold
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Swiss and ZKB is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and ZKB Gold ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Gold ETF 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 ZKB Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Gold ETF has no effect on the direction of Swiss Leader i.e., Swiss Leader and ZKB Gold go up and down completely randomly.
Pair Corralation between Swiss Leader and ZKB Gold
Assuming the 90 days trading horizon Swiss Leader is expected to generate 2.65 times less return on investment than ZKB Gold. But when comparing it to its historical volatility, Swiss Leader Price is 1.22 times less risky than ZKB Gold. It trades about 0.06 of its potential returns per unit of risk. ZKB Gold ETF is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 186,040 in ZKB Gold ETF on September 4, 2024 and sell it today you would earn a total of 60,960 from holding ZKB Gold ETF or generate 32.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Swiss Leader Price vs. ZKB Gold ETF
Performance |
| Timeline |
Swiss Leader and ZKB Gold Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
ZKB Gold ETF
Pair trading matchups for ZKB Gold
Pair Trading with Swiss Leader and ZKB Gold
The main advantage of trading using opposite Swiss Leader and ZKB Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, ZKB Gold 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 ZKB Gold will offset losses from the drop in ZKB Gold's long position.| Swiss Leader vs. St Galler Kantonalbank | Swiss Leader vs. Glarner Kantonalbank | Swiss Leader vs. Schweiter Technologies AG | Swiss Leader vs. Metall Zug AG |
| ZKB Gold vs. UBSFund Solutions MSCI | ZKB Gold vs. Vanguard SP 500 | ZKB Gold vs. iShares VII PLC | ZKB Gold vs. iShares Core SP |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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