Correlation Between Banque Cantonale and Luzerner Kantonalbank

Can any of the company-specific risk be diversified away by investing in both Banque Cantonale 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 Banque Cantonale and Luzerner Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banque Cantonale de and Luzerner Kantonalbank AG, you can compare the effects of market volatilities on Banque Cantonale 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 Banque Cantonale with a short position of Luzerner Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banque Cantonale and Luzerner Kantonalbank.

Diversification Opportunities for Banque Cantonale and Luzerner Kantonalbank

0.79

Correlation Coefficient

Banque Cantonale  Luzerner Kantonalbank

Poor diversification

The 3 months correlation between Banque and Luzerner is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Banque Cantonale de and Luzerner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luzerner Kantonalbank and Banque Cantonale 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 Banque Cantonale de 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 Banque Cantonale i.e., Banque Cantonale and Luzerner Kantonalbank go up and down completely randomly.

Pair Corralation between Banque Cantonale and Luzerner Kantonalbank

Assuming the 90 days trading horizon Banque Cantonale de is expected to generate 1.34 times more return on investment than Luzerner Kantonalbank. However, Banque Cantonale is 1.34 times more volatile than Luzerner Kantonalbank AG. It trades about 0.18 of its potential returns per unit of risk. Luzerner Kantonalbank AG is currently generating about 0.2 per unit of risk. If you would invest  24,600  in Banque Cantonale de on November 28, 2024 and sell it today you would earn a total of  2,600  from holding Banque Cantonale de or generate 10.57% return on investment over 90 days.

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

Banque Cantonale de  vs.  Luzerner Kantonalbank AG

Banque Cantonale

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banque Cantonale de are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Banque Cantonale may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Luzerner Kantonalbank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Luzerner Kantonalbank AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Luzerner Kantonalbank may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Banque Cantonale and Luzerner Kantonalbank

The main advantage of trading using opposite Banque Cantonale and Luzerner Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banque Cantonale 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.

The idea behind Banque Cantonale de and Luzerner Kantonalbank AG 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .