Correlation Between Baloise Holding and Zurich Invest

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

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

Diversification Opportunities for Baloise Holding and Zurich Invest

-0.24

Correlation Coefficient

Baloise Holding  Zurich Invest

Very good diversification

The 3 months correlation between Baloise and Zurich is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG 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 Baloise Holding 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 Baloise Holding AG 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 Baloise Holding i.e., Baloise Holding and Zurich Invest go up and down completely randomly.

Pair Corralation between Baloise Holding and Zurich Invest

Assuming the 90 days trading horizon Baloise Holding AG is expected to generate 5.44 times more return on investment than Zurich Invest. However, Baloise Holding is 5.44 times more volatile than Zurich Invest II. It trades about 0.05 of its potential returns per unit of risk. Zurich Invest II is currently generating about 0.05 per unit of risk. If you would invest  13,264  in Baloise Holding AG on September 26, 2024 and sell it today you would earn a total of  3,136  from holding Baloise Holding AG or generate 23.64% return on investment over 90 days.

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

Baloise Holding AG  vs.  Zurich Invest II

Baloise Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baloise Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Baloise Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Baloise Holding and Zurich Invest

The main advantage of trading using opposite Baloise Holding and Zurich Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baloise Holding 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 Baloise Holding AG 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.