Correlation Between Valiant Holding and VP Bank
Can any of the company-specific risk be diversified away by investing in both Valiant Holding and VP Bank 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 Valiant Holding and VP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valiant Holding AG and VP Bank AG, you can compare the effects of market volatilities on Valiant Holding and VP Bank 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 Valiant Holding with a short position of VP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valiant Holding and VP Bank.
Diversification Opportunities for Valiant Holding and VP Bank
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valiant and VPBN is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Valiant Holding AG and VP Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VP Bank AG and Valiant Holding 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 Valiant Holding AG are associated (or correlated) with VP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VP Bank AG has no effect on the direction of Valiant Holding i.e., Valiant Holding and VP Bank go up and down completely randomly.
Pair Corralation between Valiant Holding and VP Bank
Assuming the 90 days trading horizon Valiant Holding is expected to generate 3.06 times less return on investment than VP Bank. But when comparing it to its historical volatility, Valiant Holding AG is 1.99 times less risky than VP Bank. It trades about 0.12 of its potential returns per unit of risk. VP Bank AG is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,760 in VP Bank AG on November 3, 2024 and sell it today you would earn a total of 360.00 from holding VP Bank AG or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valiant Holding AG vs. VP Bank AG
Performance |
| Timeline |
| Valiant Holding AG |
| VP Bank AG |
Valiant Holding and VP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valiant Holding and VP Bank
The main advantage of trading using opposite Valiant Holding and VP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valiant Holding position performs unexpectedly, VP Bank 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 VP Bank will offset losses from the drop in VP Bank's long position.| Valiant Holding vs. Helvetia Holding AG | Valiant Holding vs. Banque Cantonale | Valiant Holding vs. Cembra Money Bank | Valiant Holding vs. Vontobel Holding |
| VP Bank vs. Liechtensteinische Landesbank AG | VP Bank vs. Leonteq AG | VP Bank vs. Helvetia Holding AG | VP Bank vs. Valiant Holding 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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