Correlation Between Schweizerische Nationalbank and VP Bank

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

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

Diversification Opportunities for Schweizerische Nationalbank and VP Bank

-0.33

Correlation Coefficient

Schweizerische Nationalbank  VP Bank

Very good diversification

The 3 months correlation between Schweizerische and VPBN is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and VP Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VP Bank AG and Schweizerische Nationalbank 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 Schweizerische Nationalbank are associated (or correlated) with VP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VP Bank AG has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and VP Bank go up and down completely randomly.

Pair Corralation between Schweizerische Nationalbank and VP Bank

Assuming the 90 days trading horizon Schweizerische Nationalbank is expected to generate 12.22 times less return on investment than VP Bank. In addition to that, Schweizerische Nationalbank is 1.22 times more volatile than VP Bank AG. It trades about 0.01 of its total potential returns per unit of risk. VP Bank AG is currently generating about 0.17 per unit of volatility. If you would invest  7,000  in VP Bank AG on October 21, 2024 and sell it today you would earn a total of  1,020  from holding VP Bank AG or generate 14.57% return on investment over 90 days.

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

Schweizerische Nationalbank  vs.  VP Bank AG

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. In spite of fairly stable basic indicators, Schweizerische Nationalbank is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

VP Bank AG

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VP Bank AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, VP Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schweizerische Nationalbank and VP Bank

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

The idea behind Schweizerische Nationalbank and VP Bank 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.