Correlation Between Kontoor Brands and Swiss Life

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

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

Diversification Opportunities for Kontoor Brands and Swiss Life

-0.61

Correlation Coefficient

Kontoor Brands  Swiss Life

Excellent diversification

The 3 months correlation between Kontoor and Swiss is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands 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 Kontoor Brands 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 Kontoor Brands 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 Kontoor Brands i.e., Kontoor Brands and Swiss Life go up and down completely randomly.

Pair Corralation between Kontoor Brands and Swiss Life

Considering the 90-day investment horizon Kontoor Brands is expected to under-perform the Swiss Life. In addition to that, Kontoor Brands is 1.79 times more volatile than Swiss Life Holding. It trades about -0.13 of its total potential returns per unit of risk. Swiss Life Holding is currently generating about 0.18 per unit of volatility. If you would invest  3,867  in Swiss Life Holding on December 27, 2024 and sell it today you would earn a total of  713.00  from holding Swiss Life Holding or generate 18.44% return on investment over 90 days.

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

Kontoor Brands  vs.  Swiss Life Holding

Kontoor Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kontoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Swiss Life Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Swiss Life showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kontoor Brands and Swiss Life

The main advantage of trading using opposite Kontoor Brands and Swiss Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontoor Brands 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 Kontoor Brands 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.