Correlation Between Svenska Handelsbanken and Julius Baer

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

By analyzing existing cross correlation between Svenska Handelsbanken PK and Julius Baer Group, you can compare the effects of market volatilities on Svenska Handelsbanken and Julius Baer 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 Svenska Handelsbanken with a short position of Julius Baer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Julius Baer.

Diversification Opportunities for Svenska Handelsbanken and Julius Baer

0.22

Correlation Coefficient

Svenska Handelsbanken  Julius Baer

Modest diversification

The 3 months correlation between Svenska and Julius is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken PK and Julius Baer Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Julius Baer Group and Svenska Handelsbanken 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 Svenska Handelsbanken PK are associated (or correlated) with Julius Baer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Julius Baer Group has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Julius Baer go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Julius Baer

Assuming the 90 days horizon Svenska Handelsbanken PK is expected to generate 0.57 times more return on investment than Julius Baer. However, Svenska Handelsbanken PK is 1.75 times less risky than Julius Baer. It trades about 0.31 of its potential returns per unit of risk. Julius Baer Group is currently generating about 0.02 per unit of risk. If you would invest  514.00  in Svenska Handelsbanken PK on November 29, 2024 and sell it today you would earn a total of  122.00  from holding Svenska Handelsbanken PK or generate 23.74% return on investment over 90 days.

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

Svenska Handelsbanken PK  vs.  Julius Baer Group

Svenska Handelsbanken

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken PK are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Svenska Handelsbanken showed solid returns over the last few months and may actually be approaching a breakup point.

Julius Baer Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Julius Baer Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Julius Baer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Svenska Handelsbanken and Julius Baer

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

The idea behind Svenska Handelsbanken PK and Julius Baer Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.