Correlation Between Sulzer AG and Swiss Life
Can any of the company-specific risk be diversified away by investing in both Sulzer AG and Swiss Life 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 Sulzer AG and Swiss Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sulzer AG and Swiss Life Holding, you can compare the effects of market volatilities on Sulzer AG and Swiss Life 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 Sulzer AG with a short position of Swiss Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sulzer AG and Swiss Life.
Diversification Opportunities for Sulzer AG and Swiss Life
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sulzer and Swiss is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sulzer AG and Swiss Life Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Life Holding and Sulzer AG 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 Sulzer AG are associated (or correlated) with Swiss Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Life Holding has no effect on the direction of Sulzer AG i.e., Sulzer AG and Swiss Life go up and down completely randomly.
Pair Corralation between Sulzer AG and Swiss Life
Assuming the 90 days trading horizon Sulzer AG is expected to generate 1.36 times more return on investment than Swiss Life. However, Sulzer AG is 1.36 times more volatile than Swiss Life Holding. It trades about 0.09 of its potential returns per unit of risk. Swiss Life Holding is currently generating about 0.09 per unit of risk. If you would invest 6,827 in Sulzer AG on August 24, 2024 and sell it today you would earn a total of 5,953 from holding Sulzer AG or generate 87.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sulzer AG vs. Swiss Life Holding
Performance |
| Timeline |
| Sulzer AG |
| Swiss Life Holding |
Sulzer AG and Swiss Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sulzer AG and Swiss Life
The main advantage of trading using opposite Sulzer AG and Swiss Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sulzer AG position performs unexpectedly, Swiss Life 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 Swiss Life will offset losses from the drop in Swiss Life's long position.| Sulzer AG vs. OC Oerlikon Corp | Sulzer AG vs. Helvetia Holding AG | Sulzer AG vs. Swiss Life Holding | Sulzer AG vs. VAT Group AG |
| Swiss Life vs. Zurich Insurance Group | Swiss Life vs. Swiss Re AG | Swiss Life vs. Swisscom AG | Swiss Life vs. Lonza Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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