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

0.65

Correlation Coefficient

Baloise Holding  IShares VII

Poor diversification

The 3 months correlation between Baloise and IShares is 0.65. 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 generate 1.1 times more return on investment than IShares VII. However, Baloise Holding is 1.1 times more volatile than iShares VII PLC. It trades about 0.23 of its potential returns per unit of risk. iShares VII PLC is currently generating about 0.16 per unit of risk. If you would invest  16,410  in Baloise Holding AG on December 30, 2024 and sell it today you would earn a total of  2,560  from holding Baloise Holding AG or generate 15.6% return on investment over 90 days.

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

Baloise Holding AG  vs.  iShares VII PLC

Baloise Holding AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baloise Holding AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Baloise Holding showed solid returns over the last few months and may actually be approaching a breakup point.

iShares VII PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares VII PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, IShares VII may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.