Correlation Between Swiss Helvetia and European Equity
Can any of the company-specific risk be diversified away by investing in both Swiss Helvetia and European Equity 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 Helvetia and European Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Helvetia Closed and European Equity Closed, you can compare the effects of market volatilities on Swiss Helvetia and European Equity 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 Helvetia with a short position of European Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Helvetia and European Equity.
Diversification Opportunities for Swiss Helvetia and European Equity
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Swiss and European is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Helvetia Closed and European Equity Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Equity Closed and Swiss Helvetia 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 Helvetia Closed are associated (or correlated) with European Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Equity Closed has no effect on the direction of Swiss Helvetia i.e., Swiss Helvetia and European Equity go up and down completely randomly.
Pair Corralation between Swiss Helvetia and European Equity
Considering the 90-day investment horizon Swiss Helvetia Closed is expected to under-perform the European Equity. In addition to that, Swiss Helvetia is 1.1 times more volatile than European Equity Closed. It trades about -0.38 of its total potential returns per unit of risk. European Equity Closed is currently generating about -0.37 per unit of volatility. If you would invest 900.00 in European Equity Closed on August 27, 2024 and sell it today you would lose (61.00) from holding European Equity Closed or give up 6.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Helvetia Closed vs. European Equity Closed
Performance |
| Timeline |
| Swiss Helvetia Closed |
| European Equity Closed |
Swiss Helvetia and European Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Helvetia and European Equity
The main advantage of trading using opposite Swiss Helvetia and European Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Helvetia position performs unexpectedly, European Equity 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 European Equity will offset losses from the drop in European Equity's long position.| Swiss Helvetia vs. Pimco New York | Swiss Helvetia vs. First Trust Specialty | Swiss Helvetia vs. NXG NextGen Infrastructure | Swiss Helvetia vs. Taiwan Closed |
| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Invesco High Income |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |