Correlation Between Baloise Holding and Xtrackers Switzerland

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

Diversification Opportunities for Baloise Holding and Xtrackers Switzerland

0.76

Correlation Coefficient

Baloise Holding  Xtrackers Switzerland

Poor diversification

The 3 months correlation between Baloise and Xtrackers is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and Xtrackers Switzerland UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Switzerland 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 Xtrackers Switzerland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Switzerland has no effect on the direction of Baloise Holding i.e., Baloise Holding and Xtrackers Switzerland go up and down completely randomly.

Pair Corralation between Baloise Holding and Xtrackers Switzerland

Assuming the 90 days trading horizon Baloise Holding AG is expected to generate 1.37 times more return on investment than Xtrackers Switzerland. However, Baloise Holding is 1.37 times more volatile than Xtrackers Switzerland UCITS. It trades about 0.23 of its potential returns per unit of risk. Xtrackers Switzerland UCITS is currently generating about 0.26 per unit of risk. If you would invest  16,460  in Baloise Holding AG on December 26, 2024 and sell it today you would earn a total of  2,440  from holding Baloise Holding AG or generate 14.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Baloise Holding AG  vs.  Xtrackers Switzerland UCITS

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.

Xtrackers Switzerland

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Switzerland UCITS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Xtrackers Switzerland may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Baloise Holding and Xtrackers Switzerland

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

The idea behind Baloise Holding AG and Xtrackers Switzerland UCITS 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.