Correlation Between Baloise Holding and Luzerner Kantonalbank
Can any of the company-specific risk be diversified away by investing in both Baloise Holding and Luzerner Kantonalbank 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 Luzerner Kantonalbank 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 Luzerner Kantonalbank AG, you can compare the effects of market volatilities on Baloise Holding and Luzerner Kantonalbank 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 Luzerner Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baloise Holding and Luzerner Kantonalbank.
Diversification Opportunities for Baloise Holding and Luzerner Kantonalbank
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baloise and Luzerner is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and Luzerner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luzerner Kantonalbank 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 Luzerner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luzerner Kantonalbank has no effect on the direction of Baloise Holding i.e., Baloise Holding and Luzerner Kantonalbank go up and down completely randomly.
Pair Corralation between Baloise Holding and Luzerner Kantonalbank
Assuming the 90 days trading horizon Baloise Holding AG is expected to under-perform the Luzerner Kantonalbank. But the stock apears to be less risky and, when comparing its historical volatility, Baloise Holding AG is 1.26 times less risky than Luzerner Kantonalbank. The stock trades about -0.18 of its potential returns per unit of risk. The Luzerner Kantonalbank AG is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 6,410 in Luzerner Kantonalbank AG on September 26, 2024 and sell it today you would lose (80.00) from holding Luzerner Kantonalbank AG or give up 1.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Baloise Holding AG vs. Luzerner Kantonalbank AG
Performance |
Timeline |
Baloise Holding AG |
Luzerner Kantonalbank |
Baloise Holding and Luzerner Kantonalbank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baloise Holding and Luzerner Kantonalbank
The main advantage of trading using opposite Baloise Holding and Luzerner Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baloise Holding position performs unexpectedly, Luzerner Kantonalbank 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 Luzerner Kantonalbank will offset losses from the drop in Luzerner Kantonalbank's long position.Baloise Holding vs. Swiss Life Holding | Baloise Holding vs. Helvetia Holding AG | Baloise Holding vs. Adecco Group AG |
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Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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