Correlation Between Schweizerische Nationalbank and Banque Cantonale
Can any of the company-specific risk be diversified away by investing in both Schweizerische Nationalbank and Banque Cantonale 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 Banque Cantonale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schweizerische Nationalbank and Banque Cantonale du, you can compare the effects of market volatilities on Schweizerische Nationalbank and Banque Cantonale 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 Banque Cantonale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizerische Nationalbank and Banque Cantonale.
Diversification Opportunities for Schweizerische Nationalbank and Banque Cantonale
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schweizerische and Banque is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and Banque Cantonale du in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banque Cantonale 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 Banque Cantonale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banque Cantonale has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Banque Cantonale go up and down completely randomly.
Pair Corralation between Schweizerische Nationalbank and Banque Cantonale
Assuming the 90 days trading horizon Schweizerische Nationalbank is expected to under-perform the Banque Cantonale. In addition to that, Schweizerische Nationalbank is 2.58 times more volatile than Banque Cantonale du. It trades about -0.04 of its total potential returns per unit of risk. Banque Cantonale du is currently generating about 0.03 per unit of volatility. If you would invest 10,538 in Banque Cantonale du on September 4, 2024 and sell it today you would earn a total of 512.00 from holding Banque Cantonale du or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Schweizerische Nationalbank vs. Banque Cantonale du
Performance |
| Timeline |
| Schweizerische Nationalbank |
| Banque Cantonale |
Schweizerische Nationalbank and Banque Cantonale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schweizerische Nationalbank and Banque Cantonale
The main advantage of trading using opposite Schweizerische Nationalbank and Banque Cantonale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweizerische Nationalbank position performs unexpectedly, Banque Cantonale 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 Banque Cantonale will offset losses from the drop in Banque Cantonale's long position.The idea behind Schweizerische Nationalbank and Banque Cantonale du 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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