Correlation Between Butterfly Network and Swiss Life

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

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

Diversification Opportunities for Butterfly Network and Swiss Life

-0.72

Correlation Coefficient

Butterfly Network  Swiss Life

Pay attention - limited upside

The 3 months correlation between Butterfly and Swiss is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Butterfly Network 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 Butterfly Network 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 Butterfly Network 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 Butterfly Network i.e., Butterfly Network and Swiss Life go up and down completely randomly.

Pair Corralation between Butterfly Network and Swiss Life

Given the investment horizon of 90 days Butterfly Network is expected to generate 3.86 times more return on investment than Swiss Life. However, Butterfly Network is 3.86 times more volatile than Swiss Life Holding. It trades about 0.05 of its potential returns per unit of risk. Swiss Life Holding is currently generating about 0.06 per unit of risk. If you would invest  253.00  in Butterfly Network on October 7, 2024 and sell it today you would earn a total of  153.00  from holding Butterfly Network or generate 60.47% return on investment over 90 days.

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

Butterfly Network  vs.  Swiss Life Holding

Butterfly Network

Risk-Adjusted Performance

17 of 100

Solid

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

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 Butterfly Network and Swiss Life

The main advantage of trading using opposite Butterfly Network and Swiss Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Butterfly Network 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 Butterfly Network 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.