Correlation Between VP Bank and Berner Kantonalbank
Can any of the company-specific risk be diversified away by investing in both VP Bank and Berner Kantonalbank 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 VP Bank and Berner Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VP Bank AG and Berner Kantonalbank AG, you can compare the effects of market volatilities on VP Bank and Berner Kantonalbank 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 VP Bank with a short position of Berner Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of VP Bank and Berner Kantonalbank.
Diversification Opportunities for VP Bank and Berner Kantonalbank
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VPBN and Berner is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding VP Bank AG and Berner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berner Kantonalbank and VP Bank 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 VP Bank AG are associated (or correlated) with Berner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berner Kantonalbank has no effect on the direction of VP Bank i.e., VP Bank and Berner Kantonalbank go up and down completely randomly.
Pair Corralation between VP Bank and Berner Kantonalbank
Assuming the 90 days trading horizon VP Bank AG is expected to generate 1.97 times more return on investment than Berner Kantonalbank. However, VP Bank is 1.97 times more volatile than Berner Kantonalbank AG. It trades about 0.17 of its potential returns per unit of risk. Berner Kantonalbank AG is currently generating about 0.3 per unit of risk. If you would invest 7,580 in VP Bank AG on November 3, 2024 and sell it today you would earn a total of 540.00 from holding VP Bank AG or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VP Bank AG vs. Berner Kantonalbank AG
Performance |
| Timeline |
| VP Bank AG |
| Berner Kantonalbank |
VP Bank and Berner Kantonalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VP Bank and Berner Kantonalbank
The main advantage of trading using opposite VP Bank and Berner Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VP Bank position performs unexpectedly, Berner Kantonalbank 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 Berner Kantonalbank will offset losses from the drop in Berner Kantonalbank's long position.| VP Bank vs. Liechtensteinische Landesbank AG | VP Bank vs. Leonteq AG | VP Bank vs. Helvetia Holding AG | VP Bank vs. Valiant Holding AG |
| Berner Kantonalbank vs. Banque Cantonale | Berner Kantonalbank vs. Luzerner Kantonalbank AG | Berner Kantonalbank vs. St Galler Kantonalbank | Berner Kantonalbank vs. Basler Kantonalbank |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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