Correlation Between First Ottawa and Schweizerische Nationalbank

Can any of the company-specific risk be diversified away by investing in both First Ottawa and Schweizerische Nationalbank 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 First Ottawa and Schweizerische Nationalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Ottawa Bancshares and Schweizerische Nationalbank, you can compare the effects of market volatilities on First Ottawa and Schweizerische Nationalbank 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 First Ottawa with a short position of Schweizerische Nationalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Ottawa and Schweizerische Nationalbank.

Diversification Opportunities for First Ottawa and Schweizerische Nationalbank

-0.84

Correlation Coefficient

First Ottawa  Schweizerische Nationalbank

Pay attention - limited upside

The 3 months correlation between First and Schweizerische is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Ottawa Bancshares and Schweizerische Nationalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweizerische Nationalbank and First Ottawa 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 First Ottawa Bancshares are associated (or correlated) with Schweizerische Nationalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweizerische Nationalbank has no effect on the direction of First Ottawa i.e., First Ottawa and Schweizerische Nationalbank go up and down completely randomly.

Pair Corralation between First Ottawa and Schweizerische Nationalbank

Given the investment horizon of 90 days First Ottawa Bancshares is expected to generate 0.7 times more return on investment than Schweizerische Nationalbank. However, First Ottawa Bancshares is 1.43 times less risky than Schweizerische Nationalbank. It trades about 0.3 of its potential returns per unit of risk. Schweizerische Nationalbank is currently generating about -0.09 per unit of risk. If you would invest  11,000  in First Ottawa Bancshares on October 21, 2024 and sell it today you would earn a total of  2,500  from holding First Ottawa Bancshares or generate 22.73% return on investment over 90 days.

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

First Ottawa Bancshares  vs.  Schweizerische Nationalbank

First Ottawa Bancshares

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Ottawa Bancshares are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First Ottawa sustained solid returns over the last few months and may actually be approaching a breakup point.

Schweizerische Nationalbank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schweizerische Nationalbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with First Ottawa and Schweizerische Nationalbank

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

The idea behind First Ottawa Bancshares and Schweizerische Nationalbank 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.