Correlation Between Schweizerische Nationalbank and Mikron Holding
Can any of the company-specific risk be diversified away by investing in both Schweizerische Nationalbank and Mikron Holding 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 Mikron Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schweizerische Nationalbank and Mikron Holding AG, you can compare the effects of market volatilities on Schweizerische Nationalbank and Mikron Holding 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 Mikron Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizerische Nationalbank and Mikron Holding.
Diversification Opportunities for Schweizerische Nationalbank and Mikron Holding
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schweizerische and Mikron is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and Mikron Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mikron Holding AG 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 Mikron Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mikron Holding AG has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Mikron Holding go up and down completely randomly.
Pair Corralation between Schweizerische Nationalbank and Mikron Holding
Assuming the 90 days trading horizon Schweizerische Nationalbank is expected to under-perform the Mikron Holding. But the stock apears to be less risky and, when comparing its historical volatility, Schweizerische Nationalbank is 1.12 times less risky than Mikron Holding. The stock trades about -0.06 of its potential returns per unit of risk. The Mikron Holding AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,253 in Mikron Holding AG on September 12, 2024 and sell it today you would earn a total of 112.00 from holding Mikron Holding AG or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Schweizerische Nationalbank vs. Mikron Holding AG
Performance |
| Timeline |
| Schweizerische Nationalbank |
| Mikron Holding AG |
Schweizerische Nationalbank and Mikron Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schweizerische Nationalbank and Mikron Holding
The main advantage of trading using opposite Schweizerische Nationalbank and Mikron Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweizerische Nationalbank position performs unexpectedly, Mikron Holding 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 Mikron Holding will offset losses from the drop in Mikron Holding's long position.The idea behind Schweizerische Nationalbank and Mikron Holding AG 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.
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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