Correlation Between Swiss Leader and Immofonds

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

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

Diversification Opportunities for Swiss Leader and Immofonds

-0.72

Correlation Coefficient

Swiss Leader  Immofonds

Pay attention - limited upside

The 3 months correlation between Swiss and Immofonds is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and Immofonds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immofonds and Swiss Leader 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 Leader Price are associated (or correlated) with Immofonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immofonds has no effect on the direction of Swiss Leader i.e., Swiss Leader and Immofonds go up and down completely randomly.

Pair Corralation between Swiss Leader and Immofonds

Assuming the 90 days trading horizon Swiss Leader Price is expected to under-perform the Immofonds. In addition to that, Swiss Leader is 1.09 times more volatile than Immofonds. It trades about -0.02 of its total potential returns per unit of risk. Immofonds is currently generating about 0.11 per unit of volatility. If you would invest  53,200  in Immofonds on September 27, 2024 and sell it today you would earn a total of  6,000  from holding Immofonds or generate 11.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Swiss Leader Price  vs.  Immofonds

Pair Trading with Swiss Leader and Immofonds

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

The idea behind Swiss Leader Price and Immofonds 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.