Correlation Between BB Seguridade and Swiss Life

Can any of the company-specific risk be diversified away by investing in both BB Seguridade and Swiss Life 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 BB Seguridade and Swiss Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BB Seguridade Participacoes and Swiss Life Holding, you can compare the effects of market volatilities on BB Seguridade and Swiss Life 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 BB Seguridade with a short position of Swiss Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Swiss Life.

Diversification Opportunities for BB Seguridade and Swiss Life

0.41

Correlation Coefficient

BB Seguridade  Swiss Life

Very weak diversification

The 3 months correlation between BBSEY and Swiss is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Swiss Life Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Life Holding and BB Seguridade 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 BB Seguridade Participacoes are associated (or correlated) with Swiss Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Life Holding has no effect on the direction of BB Seguridade i.e., BB Seguridade and Swiss Life go up and down completely randomly.

Pair Corralation between BB Seguridade and Swiss Life

Assuming the 90 days horizon BB Seguridade is expected to generate 13.1 times less return on investment than Swiss Life. In addition to that, BB Seguridade is 1.21 times more volatile than Swiss Life Holding. It trades about 0.01 of its total potential returns per unit of risk. Swiss Life Holding is currently generating about 0.08 per unit of volatility. If you would invest  3,060  in Swiss Life Holding on September 15, 2024 and sell it today you would earn a total of  870.00  from holding Swiss Life Holding or generate 28.43% return on investment over 90 days.

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

BB Seguridade Participacoes  vs.  Swiss Life Holding

BB Seguridade Partic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Seguridade Participacoes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Swiss Life Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swiss Life Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Swiss Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BB Seguridade and Swiss Life

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

The idea behind BB Seguridade Participacoes and Swiss Life Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.