Correlation Between Swiss Re and Baloise Holding
Can any of the company-specific risk be diversified away by investing in both Swiss Re and Baloise 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 Swiss Re and Baloise Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Re AG and Baloise Holding AG, you can compare the effects of market volatilities on Swiss Re and Baloise 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 Swiss Re with a short position of Baloise Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and Baloise Holding.
Diversification Opportunities for Swiss Re and Baloise Holding
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Swiss and Baloise is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG and Baloise Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baloise Holding AG and Swiss Re 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 Swiss Re AG are associated (or correlated) with Baloise Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baloise Holding AG has no effect on the direction of Swiss Re i.e., Swiss Re and Baloise Holding go up and down completely randomly.
Pair Corralation between Swiss Re and Baloise Holding
Assuming the 90 days trading horizon Swiss Re AG is expected to generate 1.77 times more return on investment than Baloise Holding. However, Swiss Re is 1.77 times more volatile than Baloise Holding AG. It trades about 0.25 of its potential returns per unit of risk. Baloise Holding AG is currently generating about -0.1 per unit of risk. If you would invest 11,280 in Swiss Re AG on October 26, 2024 and sell it today you would earn a total of 2,580 from holding Swiss Re AG or generate 22.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Re AG vs. Baloise Holding AG
Performance |
| Timeline |
| Swiss Re AG |
| Baloise Holding AG |
Swiss Re and Baloise Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Re and Baloise Holding
The main advantage of trading using opposite Swiss Re and Baloise Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Re position performs unexpectedly, Baloise 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 Baloise Holding will offset losses from the drop in Baloise Holding's long position.| Swiss Re vs. Zurich Insurance Group | Swiss Re vs. Swiss Life Holding | Swiss Re vs. Novartis AG | Swiss Re vs. UBS Group AG |
| Baloise Holding vs. Swiss Life Holding | Baloise Holding vs. Helvetia Holding AG | Baloise Holding vs. Swisscom AG | Baloise Holding vs. Zurich Insurance Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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