Correlation Between CSIF III and BCV Swiss

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

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

Diversification Opportunities for CSIF III and BCV Swiss

-0.64

Correlation Coefficient

CSIF III  BCV Swiss

Excellent diversification

The 3 months correlation between CSIF and BCV is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding CSIF III Equity 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 CSIF III 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 CSIF III Equity 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 CSIF III i.e., CSIF III and BCV Swiss go up and down completely randomly.

Pair Corralation between CSIF III and BCV Swiss

Assuming the 90 days trading horizon CSIF III Equity is expected to under-perform the BCV Swiss. In addition to that, CSIF III is 1.61 times more volatile than BCV Swiss Equity. It trades about -0.29 of its total potential returns per unit of risk. BCV Swiss Equity is currently generating about -0.17 per unit of volatility. If you would invest  10,857  in BCV Swiss Equity on September 27, 2024 and sell it today you would lose (192.00) from holding BCV Swiss Equity or give up 1.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CSIF III Equity  vs.  BCV Swiss Equity

CSIF III Equity

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSIF III Equity are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, CSIF III is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CSIF III and BCV Swiss

The main advantage of trading using opposite CSIF III and BCV Swiss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSIF III 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 CSIF III Equity 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.