Correlation Between Swatch Group and Compagnie Financire
Can any of the company-specific risk be diversified away by investing in both Swatch Group and Compagnie Financire 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 Swatch Group and Compagnie Financire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swatch Group AG and Compagnie Financire Richemont, you can compare the effects of market volatilities on Swatch Group and Compagnie Financire 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 Swatch Group with a short position of Compagnie Financire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch Group and Compagnie Financire.
Diversification Opportunities for Swatch Group and Compagnie Financire
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Swatch and Compagnie is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Swatch Group AG and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financire and Swatch Group 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 Swatch Group AG are associated (or correlated) with Compagnie Financire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financire has no effect on the direction of Swatch Group i.e., Swatch Group and Compagnie Financire go up and down completely randomly.
Pair Corralation between Swatch Group and Compagnie Financire
Assuming the 90 days trading horizon Swatch Group AG is expected to under-perform the Compagnie Financire. But the stock apears to be less risky and, when comparing its historical volatility, Swatch Group AG is 1.05 times less risky than Compagnie Financire. The stock trades about -0.04 of its potential returns per unit of risk. The Compagnie Financire Richemont is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 11,879 in Compagnie Financire Richemont on September 3, 2024 and sell it today you would earn a total of 391.00 from holding Compagnie Financire Richemont or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swatch Group AG vs. Compagnie Financire Richemont
Performance |
| Timeline |
| Swatch Group AG |
| Compagnie Financire |
Swatch Group and Compagnie Financire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swatch Group and Compagnie Financire
The main advantage of trading using opposite Swatch Group and Compagnie Financire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swatch Group position performs unexpectedly, Compagnie Financire 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 Compagnie Financire will offset losses from the drop in Compagnie Financire's long position.| Swatch Group vs. Compagnie Financire Richemont | Swatch Group vs. Swiss Life Holding | Swatch Group vs. Swisscom AG | Swatch Group vs. Swiss Re AG |
| Compagnie Financire vs. Swatch Group AG | Compagnie Financire vs. Givaudan SA | Compagnie Financire vs. Zurich Insurance Group | Compagnie Financire vs. Novartis 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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