Correlation Between Swiss Re and BVZ Holding
Can any of the company-specific risk be diversified away by investing in both Swiss Re and BVZ 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 BVZ 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 BVZ Holding AG, you can compare the effects of market volatilities on Swiss Re and BVZ 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 BVZ Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and BVZ Holding.
Diversification Opportunities for Swiss Re and BVZ Holding
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Swiss and BVZ is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG and BVZ Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BVZ 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 BVZ Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BVZ Holding AG has no effect on the direction of Swiss Re i.e., Swiss Re and BVZ Holding go up and down completely randomly.
Pair Corralation between Swiss Re and BVZ Holding
Assuming the 90 days trading horizon Swiss Re AG is expected to generate 0.94 times more return on investment than BVZ Holding. However, Swiss Re AG is 1.07 times less risky than BVZ Holding. It trades about 0.12 of its potential returns per unit of risk. BVZ Holding AG is currently generating about -0.01 per unit of risk. If you would invest 9,214 in Swiss Re AG on September 8, 2024 and sell it today you would earn a total of 3,916 from holding Swiss Re AG or generate 42.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.77% |
| Values | Daily Returns |
Swiss Re AG vs. BVZ Holding AG
Performance |
| Timeline |
| Swiss Re AG |
| BVZ Holding AG |
Swiss Re and BVZ Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Re and BVZ Holding
The main advantage of trading using opposite Swiss Re and BVZ Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Re position performs unexpectedly, BVZ 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 BVZ Holding will offset losses from the drop in BVZ 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 |
| BVZ Holding vs. Logitech International SA | BVZ Holding vs. Swiss Life Holding | BVZ Holding vs. Swiss Re AG | BVZ Holding vs. Geberit AG |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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