Correlation Between Baloise Holding and Julius Baer

Can any of the company-specific risk be diversified away by investing in both Baloise Holding and Julius Baer 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 Julius Baer 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 Julius Baer Edelweiss, you can compare the effects of market volatilities on Baloise Holding and Julius Baer 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 Julius Baer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baloise Holding and Julius Baer.

Diversification Opportunities for Baloise Holding and Julius Baer

0.82

Correlation Coefficient

Baloise Holding  Julius Baer

Very poor diversification

The 3 months correlation between Baloise and Julius is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and Julius Baer Edelweiss in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Julius Baer Edelweiss 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 Julius Baer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Julius Baer Edelweiss has no effect on the direction of Baloise Holding i.e., Baloise Holding and Julius Baer go up and down completely randomly.

Pair Corralation between Baloise Holding and Julius Baer

Assuming the 90 days trading horizon Baloise Holding is expected to generate 2.75 times less return on investment than Julius Baer. In addition to that, Baloise Holding is 1.14 times more volatile than Julius Baer Edelweiss. It trades about 0.04 of its total potential returns per unit of risk. Julius Baer Edelweiss is currently generating about 0.12 per unit of volatility. If you would invest  14,992  in Julius Baer Edelweiss on October 14, 2024 and sell it today you would earn a total of  166.00  from holding Julius Baer Edelweiss or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	87.5%
Values	Daily Returns

Baloise Holding AG  vs.  Julius Baer Edelweiss

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Julius Baer Edelweiss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Julius Baer Edelweiss has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Julius Baer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Baloise Holding and Julius Baer

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

The idea behind Baloise Holding AG and Julius Baer Edelweiss 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.