Correlation Between Swiss Life and Allianz SE

Can any of the company-specific risk be diversified away by investing in both Swiss Life and Allianz SE 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 Allianz SE 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 Allianz SE ADR, you can compare the effects of market volatilities on Swiss Life and Allianz SE 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 Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and Allianz SE.

Diversification Opportunities for Swiss Life and Allianz SE

-0.19

Correlation Coefficient

Swiss Life  Allianz SE

Good diversification

The 3 months correlation between Swiss and Allianz is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Allianz SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE ADR 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 Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE ADR has no effect on the direction of Swiss Life i.e., Swiss Life and Allianz SE go up and down completely randomly.

Pair Corralation between Swiss Life and Allianz SE

If you would invest  2,379  in Allianz SE ADR on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Allianz SE ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Swiss Life Holding  vs.  Allianz SE ADR

Swiss Life Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swiss Life Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Swiss Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Allianz SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianz SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Swiss Life and Allianz SE

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

The idea behind Swiss Life Holding and Allianz SE ADR 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.