Correlation Between Baloise Holding and IShares VII

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

Diversification Opportunities for Baloise Holding and IShares VII

0.15

Correlation Coefficient

Baloise Holding  IShares VII

Average diversification

The 3 months correlation between Baloise and IShares is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and iShares VII PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII PLC 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 IShares VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII PLC has no effect on the direction of Baloise Holding i.e., Baloise Holding and IShares VII go up and down completely randomly.

Pair Corralation between Baloise Holding and IShares VII

Assuming the 90 days trading horizon Baloise Holding AG is expected to under-perform the IShares VII. In addition to that, Baloise Holding is 1.23 times more volatile than iShares VII PLC. It trades about -0.06 of its total potential returns per unit of risk. iShares VII PLC is currently generating about 0.03 per unit of volatility. If you would invest  15,956  in iShares VII PLC on September 16, 2024 and sell it today you would earn a total of  170.00  from holding iShares VII PLC or generate 1.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Baloise Holding AG  vs.  iShares VII PLC

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares VII PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares VII PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares VII is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Baloise Holding and IShares VII

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

The idea behind Baloise Holding AG and iShares VII PLC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.