Correlation Between BCV Swiss and Zurich Invest

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

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

Diversification Opportunities for BCV Swiss and Zurich Invest

-0.1

Correlation Coefficient

BCV Swiss  Zurich Invest

Good diversification

The 3 months correlation between BCV and Zurich is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BCV Swiss Equity and Zurich Invest II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Invest II and BCV Swiss 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 BCV Swiss Equity are associated (or correlated) with Zurich Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Invest II has no effect on the direction of BCV Swiss i.e., BCV Swiss and Zurich Invest go up and down completely randomly.

Pair Corralation between BCV Swiss and Zurich Invest

Assuming the 90 days trading horizon BCV Swiss Equity is expected to generate 3.36 times more return on investment than Zurich Invest. However, BCV Swiss is 3.36 times more volatile than Zurich Invest II. It trades about 0.04 of its potential returns per unit of risk. Zurich Invest II is currently generating about 0.03 per unit of risk. If you would invest  9,999  in BCV Swiss Equity on October 15, 2024 and sell it today you would earn a total of  1,092  from holding BCV Swiss Equity or generate 10.92% return on investment over 90 days.

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

BCV Swiss Equity  vs.  Zurich Invest II

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Zurich Invest II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zurich Invest II has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady forward-looking indicators, Zurich Invest is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with BCV Swiss and Zurich Invest

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

The idea behind BCV Swiss Equity and Zurich Invest II 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.