Correlation Between BCV Swiss and CSIF III

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

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

Diversification Opportunities for BCV Swiss and CSIF III

0.81

Correlation Coefficient

BCV Swiss  CSIF III

Very poor diversification

The 3 months correlation between BCV and CSIF is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BCV Swiss Franc and CSIF III Eq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSIF III Eq 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 Franc are associated (or correlated) with CSIF III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSIF III Eq has no effect on the direction of BCV Swiss i.e., BCV Swiss and CSIF III go up and down completely randomly.

Pair Corralation between BCV Swiss and CSIF III

Assuming the 90 days trading horizon BCV Swiss is expected to generate 1.88 times less return on investment than CSIF III. But when comparing it to its historical volatility, BCV Swiss Franc is 5.05 times less risky than CSIF III. It trades about 0.16 of its potential returns per unit of risk. CSIF III Eq is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  160,988  in CSIF III Eq on September 28, 2024 and sell it today you would earn a total of  9,491  from holding CSIF III Eq or generate 5.9% return on investment over 90 days.

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

BCV Swiss Franc  vs.  CSIF III Eq

BCV Swiss Franc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BCV Swiss Franc are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable basic indicators, BCV Swiss is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

CSIF III Eq

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CSIF III Eq are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, CSIF III is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BCV Swiss and CSIF III

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

The idea behind BCV Swiss Franc and CSIF III Eq 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.