Correlation Between Swiss Life and Banque Cantonale

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

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

Diversification Opportunities for Swiss Life and Banque Cantonale

0.86

Correlation Coefficient

Swiss Life  Banque Cantonale

Very poor diversification

The 3 months correlation between Swiss and Banque is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Banque Cantonale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banque Cantonale and Swiss Life 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 Swiss Life Holding are associated (or correlated) with Banque Cantonale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banque Cantonale has no effect on the direction of Swiss Life i.e., Swiss Life and Banque Cantonale go up and down completely randomly.

Pair Corralation between Swiss Life and Banque Cantonale

Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 0.75 times more return on investment than Banque Cantonale. However, Swiss Life Holding is 1.33 times less risky than Banque Cantonale. It trades about 0.43 of its potential returns per unit of risk. Banque Cantonale is currently generating about 0.21 per unit of risk. If you would invest  73,900  in Swiss Life Holding on November 28, 2024 and sell it today you would earn a total of  4,620  from holding Swiss Life Holding or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Swiss Life Holding  vs.  Banque Cantonale

Swiss Life Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Swiss Life may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Banque Cantonale

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banque Cantonale are ranked lower than 8 (%) 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.

Pair Trading with Swiss Life and Banque Cantonale

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

The idea behind Swiss Life Holding and Banque Cantonale 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.