Correlation Between LO Funds and BCV Swiss

Can any of the company-specific risk be diversified away by investing in both LO Funds and BCV Swiss 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 LO Funds and BCV Swiss into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LO Funds Swiss and BCV Swiss Equity, you can compare the effects of market volatilities on LO Funds and BCV Swiss 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 LO Funds with a short position of BCV Swiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of LO Funds and BCV Swiss.

Diversification Opportunities for LO Funds and BCV Swiss

0.93

Correlation Coefficient

LO Funds  BCV Swiss

Almost no diversification

The 3 months correlation between 0P00001R8Q and BCV is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding LO Funds Swiss and BCV Swiss Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCV Swiss Equity and LO Funds 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 LO Funds Swiss are associated (or correlated) with BCV Swiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCV Swiss Equity has no effect on the direction of LO Funds i.e., LO Funds and BCV Swiss go up and down completely randomly.

Pair Corralation between LO Funds and BCV Swiss

Assuming the 90 days trading horizon LO Funds is expected to generate 4.43 times less return on investment than BCV Swiss. In addition to that, LO Funds is 1.12 times more volatile than BCV Swiss Equity. It trades about 0.01 of its total potential returns per unit of risk. BCV Swiss Equity is currently generating about 0.03 per unit of volatility. If you would invest  9,827  in BCV Swiss Equity on September 29, 2024 and sell it today you would earn a total of  918.00  from holding BCV Swiss Equity or generate 9.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.79%
Values	Daily Returns

LO Funds Swiss  vs.  BCV Swiss Equity

LO Funds Swiss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LO Funds Swiss has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

BCV Swiss Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCV Swiss Equity has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong forward indicators, BCV Swiss is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with LO Funds and BCV Swiss

The main advantage of trading using opposite LO Funds and BCV Swiss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LO Funds position performs unexpectedly, BCV Swiss 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 BCV Swiss will offset losses from the drop in BCV Swiss' long position.

The idea behind LO Funds Swiss and BCV Swiss Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.