Correlation Between Swiss Re and ECHO INVESTMENT

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

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

Diversification Opportunities for Swiss Re and ECHO INVESTMENT

0.59

Correlation Coefficient

Swiss Re  ECHO INVESTMENT

Very weak diversification

The 3 months correlation between Swiss and ECHO is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY and Swiss Re 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 Re AG are associated (or correlated) with ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of Swiss Re i.e., Swiss Re and ECHO INVESTMENT go up and down completely randomly.

Pair Corralation between Swiss Re and ECHO INVESTMENT

Assuming the 90 days trading horizon Swiss Re AG is expected to generate 1.11 times more return on investment than ECHO INVESTMENT. However, Swiss Re is 1.11 times more volatile than ECHO INVESTMENT ZY. It trades about 0.21 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about 0.12 per unit of risk. If you would invest  3,000  in Swiss Re AG on October 6, 2024 and sell it today you would earn a total of  560.00  from holding Swiss Re AG or generate 18.67% return on investment over 90 days.

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

Swiss Re AG  vs.  ECHO INVESTMENT ZY

Swiss Re AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Re AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Swiss Re reported solid returns over the last few months and may actually be approaching a breakup point.

ECHO INVESTMENT ZY

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ECHO INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Swiss Re and ECHO INVESTMENT

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

The idea behind Swiss Re AG and ECHO INVESTMENT ZY 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.