Correlation Between IShares SMI and Baloise Holding

Can any of the company-specific risk be diversified away by investing in both IShares SMI and Baloise Holding 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 IShares SMI and Baloise Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares SMI ETF and Baloise Holding AG, you can compare the effects of market volatilities on IShares SMI and Baloise Holding 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 IShares SMI with a short position of Baloise Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SMI and Baloise Holding.

Diversification Opportunities for IShares SMI and Baloise Holding

0.85

Correlation Coefficient

IShares SMI  Baloise Holding

Very poor diversification

The 3 months correlation between IShares and Baloise is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares SMI ETF and Baloise Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baloise Holding AG and IShares SMI 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 iShares SMI ETF are associated (or correlated) with Baloise Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baloise Holding AG has no effect on the direction of IShares SMI i.e., IShares SMI and Baloise Holding go up and down completely randomly.

Pair Corralation between IShares SMI and Baloise Holding

Assuming the 90 days trading horizon iShares SMI ETF is expected to generate 0.95 times more return on investment than Baloise Holding. However, iShares SMI ETF is 1.06 times less risky than Baloise Holding. It trades about -0.05 of its potential returns per unit of risk. Baloise Holding AG is currently generating about -0.06 per unit of risk. If you would invest  12,438  in iShares SMI ETF on September 16, 2024 and sell it today you would lose (308.00) from holding iShares SMI ETF or give up 2.48% of portfolio value over 90 days.

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

iShares SMI ETF  vs.  Baloise Holding AG

iShares SMI ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares SMI ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares SMI is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Baloise Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baloise Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Baloise Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares SMI and Baloise Holding

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

The idea behind iShares SMI ETF and Baloise Holding 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.