Correlation Between SWISS WATER and AmerisourceBergen

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

By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and AmerisourceBergen, you can compare the effects of market volatilities on SWISS WATER and AmerisourceBergen 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 SWISS WATER with a short position of AmerisourceBergen. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and AmerisourceBergen.

Diversification Opportunities for SWISS WATER and AmerisourceBergen

0.73

Correlation Coefficient

SWISS WATER  AmerisourceBergen

Poor diversification

The 3 months correlation between SWISS and AmerisourceBergen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and AmerisourceBergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmerisourceBergen and SWISS WATER 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 SWISS WATER DECAFFCOFFEE are associated (or correlated) with AmerisourceBergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmerisourceBergen has no effect on the direction of SWISS WATER i.e., SWISS WATER and AmerisourceBergen go up and down completely randomly.

Pair Corralation between SWISS WATER and AmerisourceBergen

Assuming the 90 days horizon SWISS WATER is expected to generate 1.03 times less return on investment than AmerisourceBergen. In addition to that, SWISS WATER is 1.98 times more volatile than AmerisourceBergen. It trades about 0.03 of its total potential returns per unit of risk. AmerisourceBergen is currently generating about 0.07 per unit of volatility. If you would invest  14,601  in AmerisourceBergen on October 11, 2024 and sell it today you would earn a total of  7,169  from holding AmerisourceBergen or generate 49.1% return on investment over 90 days.

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

SWISS WATER DECAFFCOFFEE  vs.  AmerisourceBergen

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SWISS WATER DECAFFCOFFEE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SWISS WATER is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AmerisourceBergen

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AmerisourceBergen are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AmerisourceBergen may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SWISS WATER and AmerisourceBergen

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

The idea behind SWISS WATER DECAFFCOFFEE and AmerisourceBergen 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.