Correlation Between Schweizerische Nationalbank and Graubuendner Kantonalbank
Can any of the company-specific risk be diversified away by investing in both Schweizerische Nationalbank and Graubuendner Kantonalbank 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 Schweizerische Nationalbank and Graubuendner Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schweizerische Nationalbank and Graubuendner Kantonalbank, you can compare the effects of market volatilities on Schweizerische Nationalbank and Graubuendner Kantonalbank 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 Schweizerische Nationalbank with a short position of Graubuendner Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizerische Nationalbank and Graubuendner Kantonalbank.
Diversification Opportunities for Schweizerische Nationalbank and Graubuendner Kantonalbank
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Schweizerische and Graubuendner is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and Graubuendner Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graubuendner Kantonalbank and Schweizerische Nationalbank 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 Schweizerische Nationalbank are associated (or correlated) with Graubuendner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graubuendner Kantonalbank has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Graubuendner Kantonalbank go up and down completely randomly.
Pair Corralation between Schweizerische Nationalbank and Graubuendner Kantonalbank
Assuming the 90 days trading horizon Schweizerische Nationalbank is expected to under-perform the Graubuendner Kantonalbank. In addition to that, Schweizerische Nationalbank is 2.54 times more volatile than Graubuendner Kantonalbank. It trades about -0.14 of its total potential returns per unit of risk. Graubuendner Kantonalbank is currently generating about -0.1 per unit of volatility. If you would invest 176,500 in Graubuendner Kantonalbank on September 19, 2024 and sell it today you would lose (2,500) from holding Graubuendner Kantonalbank or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schweizerische Nationalbank vs. Graubuendner Kantonalbank
Performance |
| Timeline |
| Schweizerische Nationalbank |
| Graubuendner Kantonalbank |
Schweizerische Nationalbank and Graubuendner Kantonalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schweizerische Nationalbank and Graubuendner Kantonalbank
The main advantage of trading using opposite Schweizerische Nationalbank and Graubuendner Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweizerische Nationalbank position performs unexpectedly, Graubuendner Kantonalbank 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 Graubuendner Kantonalbank will offset losses from the drop in Graubuendner Kantonalbank's long position.The idea behind Schweizerische Nationalbank and Graubuendner Kantonalbank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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