Correlation Between Schweizerische Nationalbank and Swissquote Group
Can any of the company-specific risk be diversified away by investing in both Schweizerische Nationalbank and Swissquote 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 Schweizerische Nationalbank and Swissquote Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schweizerische Nationalbank and Swissquote Group Holding, you can compare the effects of market volatilities on Schweizerische Nationalbank and Swissquote 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 Schweizerische Nationalbank with a short position of Swissquote Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizerische Nationalbank and Swissquote Group.
Diversification Opportunities for Schweizerische Nationalbank and Swissquote Group
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Schweizerische and Swissquote is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and Swissquote Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swissquote Group Holding 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 Swissquote Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swissquote Group Holding has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Swissquote Group go up and down completely randomly.
Pair Corralation between Schweizerische Nationalbank and Swissquote Group
Assuming the 90 days trading horizon Schweizerische Nationalbank is expected to under-perform the Swissquote Group. But the stock apears to be less risky and, when comparing its historical volatility, Schweizerische Nationalbank is 1.18 times less risky than Swissquote Group. The stock trades about -0.04 of its potential returns per unit of risk. The Swissquote Group Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 16,998 in Swissquote Group Holding on August 27, 2024 and sell it today you would earn a total of 16,742 from holding Swissquote Group Holding or generate 98.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.34% |
| Values | Daily Returns |
Schweizerische Nationalbank vs. Swissquote Group Holding
Performance |
| Timeline |
| Schweizerische Nationalbank |
| Swissquote Group Holding |
Schweizerische Nationalbank and Swissquote Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schweizerische Nationalbank and Swissquote Group
The main advantage of trading using opposite Schweizerische Nationalbank and Swissquote Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweizerische Nationalbank position performs unexpectedly, Swissquote 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 Swissquote Group will offset losses from the drop in Swissquote Group's long position.The idea behind Schweizerische Nationalbank and Swissquote Group Holding 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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