Correlation Between Schweizerische Nationalbank and Xlife Sciences
Can any of the company-specific risk be diversified away by investing in both Schweizerische Nationalbank and Xlife Sciences 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 Xlife Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schweizerische Nationalbank and Xlife Sciences AG, you can compare the effects of market volatilities on Schweizerische Nationalbank and Xlife Sciences 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 Xlife Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizerische Nationalbank and Xlife Sciences.
Diversification Opportunities for Schweizerische Nationalbank and Xlife Sciences
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Schweizerische and Xlife is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and Xlife Sciences AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xlife Sciences 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 Xlife Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xlife Sciences AG has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Xlife Sciences go up and down completely randomly.
Pair Corralation between Schweizerische Nationalbank and Xlife Sciences
Assuming the 90 days trading horizon Schweizerische Nationalbank is expected to under-perform the Xlife Sciences. But the stock apears to be less risky and, when comparing its historical volatility, Schweizerische Nationalbank is 2.9 times less risky than Xlife Sciences. The stock trades about -0.08 of its potential returns per unit of risk. The Xlife Sciences AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,420 in Xlife Sciences AG on September 4, 2024 and sell it today you would earn a total of 200.00 from holding Xlife Sciences AG or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schweizerische Nationalbank vs. Xlife Sciences AG
Performance |
| Timeline |
| Schweizerische Nationalbank |
| Xlife Sciences AG |
Schweizerische Nationalbank and Xlife Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schweizerische Nationalbank and Xlife Sciences
The main advantage of trading using opposite Schweizerische Nationalbank and Xlife Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweizerische Nationalbank position performs unexpectedly, Xlife Sciences 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 Xlife Sciences will offset losses from the drop in Xlife Sciences' long position.The idea behind Schweizerische Nationalbank and Xlife Sciences 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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